Financial literacy has always been something that should be for everyone, yet for frustrating reasons, is gatekept for the select few. Money is a fact of life — it literally runs the world, but the ability to comprehend and wield the power of money is monopolized by certain communities, namely the 1%, who may not have the rest of the world’s best interest in mind. Marginalized communities are disproportionately affected by a lack of access to quality financial education and opportunities as a direct result of numerous systemic practices in place in the U.S. To help address these inequities and — more importantly — make meaningful change, we must first have a comprehensive understanding of the situation at hand. Let’s take a deeper look at the financial literacy gaps among demographics in the U.S.

When it comes to the wealth gap in the U.S., it’s undeniably obvious that the playing field is far from even. According to a 2021 report from the Federal Reserve, the average white household in America earns roughly double what average Black, Hispanic, or Latino households earn, and the latter groups have only about 15-20% as much net worth as the former. There are innumerable factors that feed into these disparities, but inequitable access to financial education and opportunities are the most predominant.

Factors That Influence Financial Literacy Gaps 

Access to quality financial education comes back to a number of factors, including (but not limited to) racialized infrastructure and zoning that results in wildly uneven public school and community funding. Dating back over a century, this pervasive situation has disproportionately detrimented marginalized populations, resulting in fewer opportunities for members of those communities. Financial education directly impacts an individual’s financial success, regardless of where they start out on their financial journey. Without access to financial education, among other subjects, attaining even a moderately comfortable life is infinitely more difficult than for those who grew up with education and infrastructural support systems needed for quality of life. So why then are some communities still being left behind and left out of the high financial literacy club in this country?

There’s simply no beating around the bush here: White communities are most often afforded higher-quality overall education, including financial education, which in turn sets them up for lifelong success that can translate into generational wealth. Saving, investing, budgeting, smart spending, and many other aspects of handling one’s finances are all crucial financial literacy topics that are being withheld from certain communities, harming them in the process, which is clear from the data available. Lack of financial education has long been one of the major factors that influences an increased risk of debt, not planning for retirement/emergencies, lack of access to housing opportunities, and much more — all of which in turn decreases the possibility of building generational wealth. 

“Making financial literacy more accessible and equitable for everyone is a long-term project, but the strides we’ve already made are proof that change is possible.”

Financial Literacy Gaps In The U.S. 

According to a 2018 Financial Industry Regulatory Authority (FINRA) national survey, financial literacy is lowest among women, youth, and those with lower levels of education, which are often minority ethnic and racial communities. Per the study’s results, white and Asian-American respondents correctly answered an average of 3.2 out of 6 basic financial literacy questions. Conversely, Black and Hispanic Americans were able to correctly answer an average of 2.3 and 2.6 questions, respectively. Notably, both of the latter groups historically receive less overall access to general and financial education than the former, which has an obvious effect on their financial competency and eventual financial prosperity.

Another persistent gap in financial literacy exists between men and women; societal standards, expectations, and systems have long blocked women from gaining the same level of financial education and experience as men, putting single women, especially, at a higher risk of poor financial practices. When looking at financial knowledge survey results across functional areas such as borrowing, investing, and comprehending risk, it was found that women consistently scored lower than male respondents. Those topics, and many more, are essential for making informed, responsible financial decisions, and women are at a clear disadvantage. 

How Zogo Is Aiming To Help 

From our first days, our mission has been to make financial literacy more accessible to the masses than ever before. Not only are certain communities disadvantaged by a lack of access to financial literacy, but the quality of financial education in places that were already offering it are in need of a major tune up. In order to address the multitude of concerns surrounding this essential topic, we turned to a strategy that would decrease barriers to access: a free financial literacy app. Making financial literacy more accessible and equitable for everyone is a long-term project, but the strides we’ve already made are proof that change is possible.

Our educational model is simple, easily-digestible, and genuinely fun for our users thanks to the gamified nature of our app. One of the most exciting and intriguing aspects for our users is that the points they gain by working through the financial literacy modules are redeemable for real gift cards, meaning they’re incrementally rewarded for learning about financial topics.  

To learn how Zogo can aid your institution in decreasing barriers of access to financial education in your community, request a demo.