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I like to call this the Powerball problem. You might remember seeing a certain meme relating to the big 2016 Powerball lottery. The buzz around this lottery was enormous, with its promise of giving away $1.3 billion to one lucky winner. I logged on to Facebook one day to see this meme, which claimed in white writing on a chalkboard-green background that if that $1.3 billion were shared among America’s 300 million people, each person would receive $4.33 million. “Poverty solved!” was the enthusiastic conclusion.
Except there was a slight problem with a few decimal points. In reality, each person would receive $4.33 (leave off the million). That’s not even enough to buy lunch. Of course, someone pointed out the mistake, but not before the meme had gone viral. In fact, I was shocked to see that an acquaintance of mine who works at a bank had shared it — and not to correct the math. It just goes to show how easy it is for any of us to be swept up in fads.
Whether you want to call it financial literacy, budgeting skills, education, or something else, a lot of Americans aren’t financially savvy. And this has real consequences on their finances.
The Federal Reserve completed a great study in 2015 on the well-being of US households. Even years after the Great Recession, 47% of those surveyed across income levels couldn’t cover a surprise $400 bill without borgrid-xing or selling something. And it wasn’t just the lower income earners — 25% of people surveyed who made $100,000 or more had the same response!
That really shows that financial wellness doesn’t just happen when you start making more money. If you don’t know how to budget, pay off debts, and live within your means, those problems won’t be solved by having more money. Anyone who makes a living wage can attain financial wellness through a combination of smarter benefit designs, better tools, and appropriate guidance.
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