A person knowing less about a particular subject than they think they do can lead to some real trouble for them. It can be particularly problematic when the subject in question involves finances. Misconceptions or lack of the right knowledge on topics that touch on their financial situation could lead to a person making missteps that could have major negative financial repercussions for them and their family, both in the present and the future.
A recent study suggests it is pretty common here in the U.S. for individuals to overestimate their financial literacy and that it has been trending towards becoming increasingly so in recent years. According to the study, the percentage of Americans who think they have a “very high” level of financial knowledge has gone up in recent years, with the percentage rising from 67 percent to 76 percent between 2009 and 2015. Over this same time though, financial knowledge levels may have actually gone down among Americans, the study suggests. The study found that, between 2009 and 2015, the percentage of Americans who were able to answer four of five particular questions correctly on a basic financial literacy quiz dropped from 42 percent to 37 percent.
Why do you think the gap between what Americans think they know about finances and what they actually know appears to be growing? What do you think can best help with closing this gap?
Financial literacy is not the only area in which a knowledge gap could have some significant future financial consequences for a person. Another is estate planning. If a person thinks they know what the estate planning devices (such as a will) they have in place will do, but they are actually mistaken in this regard, it could result in very different things happening with their estate when they die than they would have wanted. This could have significant financial ramifications for their loved ones. One wonders if knowledge gaps among the American public are as common in the area of estate planning as they are in the area of financial literacy.
Among the things experienced attorneys can help individuals with when it comes to estate planning is understanding what effects different estate planning mechanisms would likely have, so they can make informed decisions about what estate planning devices to use to try to further their particular goals and wishes for the post-death distribution of their estate.