Aside from a rousing session of Monopoly, most Americans don’t give financial literacy much thought. In fact, only 40 percent of adults will maintain a budget and track their spending. That’s what the Jump$tart Coalition has discovered, and it may ring true through practically all social groups. The average American does not possess a sufficient financial education or, at a minimum, does not understand how to apply this knowledge to the real world. Jump$tart advises financial literacy among pre-school through college-age youth.

Americans owe $11.5 trillion to lenders

In brief, financial literacy is the ability to use knowledge and skills to manage financial resources effectively over a lifetime for financial well being. Why is this knowledge important for young people? Take a look at the average credit card balance of any 20-something, and you’ll see how vital it is to keep track of finances. Nearly 10 percent of post-college students have a credit card balance averaging just over $7,000, excluding financial aid repayment. Poor financial management like this usually means that by middle age most people (three-fourths of American families according to Chase Blueprint, a new system the New York-based bank uses to review credit card activity) will be living paycheck-to-paycheck. More than one-fourth of American families have no savings at all.

Today, American consumers owe about $11.52 trillion to lenders and creditors. This debt burden tends to balloon each year. And how about student loans? In 2014, student loan debt had soared by more than 11 percent. There’s more grim news because only 50 percent of American families have more than three months’ worth of expenses saved. Nearly as many—43 percent—are concerned that their savings won’t be enough to cover unexpected costs or emergencies. Chase Blueprint took time to divide various financial statistics by age group and found that among those persons ages 45 to 54 years, the median saved for retirement was $101,000. That may sound like a lot of money, but it really isn’t considering a typical retirement age of 65 years … not to mention expenses seniors (those fortunate to have a fixed income by mid century) will likely incur over an increased life span. And, because the Social Security trust fund is expected to be exhausted by 2033, 38 percent of adults are concerned about being able to retire on time—if they can afford to retire at all.

Debt crisis huge among Blacks

African Americans continue to face competing priorities when it comes to building a legacy of wealth. First off, most Blacks must pay off debt. Then they’ll begin saving for retirement and, finally, have enough life insurance to protect loved ones.

Prudential Financial conducted its “African American Financial Experience” survey in 2011, and for the past five years not much has changed in terms of Black financial literacy. The financial firm decided to take another look in 2013 and took a poll of 1,153 Americans who identified as African American and found that half of the respondents are relatively confident about their financial future. The common response was that Blacks are “doing better than one year ago,” a statement shared by only one-third of the general population.

Despite the ongoing debt crisis in most African American households, there appeared to be a silver lining to the report indicating Blacks have increasing confidence in the economy, but the findings tend to stand in stark contrast to huge accumulation of debt within the African American community.

In 2010—at the height of the Great Recession—CNN’s Soledad O’Brien hosted a report about how economic crisis can affect Black America. In “Almighty Debt,” she spoke to a number of economists but focused particularly on the Black church and how this historic entity has helped to shape the community, not only spiritually but economically. One of the persons she interviewed was a New Jersey minister, Rev. DeForest Soaries, author of “DFree: Breaking Free from Financial Slavery,” who explained that debt in the Black community may be a bigger problem than racism.

“When I see people who are stressed out because of financial lenders, couples arguing about money, people losing their homes—increasing their health risks and decreasing their productivity—it confirms for me that we’re living in a kind of slavery,” Soaries explained. “The overwhelming majority of our people don’t have a budget or written plan. Fifty-four percent of us don’t have a bank account or are still using check cashing places, money orders or payday lenders. So if 54 percent of Black people are not functional participants in the banking system, we are in bondage.” Soaries, at the time a board member of the Federal Home Loan Bank of New York, couldn’t help but to refer to Scripture, noting Proverbs 22:7: “The borrower is servant to the lender.” He offered some tips on how to beter monitor personal finances:

—Track your spending. Learn how to prepare a budget.

—Get control of your spending. No more living on credit.

—Get ahead through investments. Save $100 a month, institute a retirement plan, and invest in real estate.

—Teach other people. Give back.

Schools lack in financial education

Most adults wish they had financial coursework in school. Only 5 percent say they were taught about money by a teacher, and 40 percent say they would give themselves Cs, Ds or even Fs on their grasp of personal financial concepts. A full 85 percent of parents believe that financial education courses should be a requirement for high school graduation. Teenagers are listening to the dire American economic forecasts, and 52 percent of these young people want to learn more about how to manage money because they’re interested in budgeting, saving and investing for the future.

Celebrity economists such as Suze Orman and Robert (“Rich Dad”) Kiyosaki insist that early knowledge of money management can be a key to mid-century financial wellbeing.

“We were not taught financial literacy in school,” Kiyosaki said, “and it takes a lot of time to change your thinking and to become financially literate. Our schools do very well at teaching reading, writing and arithmetic, but they are horrible at preparing kids to work with money. Nearly every person who graduates from school is financially illiterate.”

Consumers fail in money management

The Financial Industry Regulatory Agency in 2014 conducted a survey of Americans supposedly versed in financial literacy and reported that a significantly large portion of consumers failed in money management. The respondents failed in comprehension of interest rates, the effects of inflation and in the fancy concept of risk diversification. Only one-third of respondents could correctly supply an answer to each subject question. The biggest problem, according to the survey, lies with both Generations X and Y heading eventually into to middle age because these age groups were less likely to be financially capable than older Americans. The researchers found that people with low levels of financial literacy suffer from this handicap since childhood. People with a high degree of financial literacy were more likely to plan for retirement, and those who do plan for old age could possibly accumulate more than double the wealth of those who don’t.

People who have a lower degree of financial literacy tend to borrow more, accumulate less wealth, and pay more in fees related to financial products. These individuals are less likely to invest, are more likely to experience difficulty with debt, and are less likely to know the terms of their mortgages and other loans. Another financial services organization, TIAA-CREF Institute, reported that the cost of financial ignorance can be particularly high, leading many people to incur avoidable charges and fees from things like making late credit card payments or paying only the minimum amount due. The same individuals with limited financial management skills tend to overspend their credit limit and use cash advances—which they can’t repay and therefore subject themselves to bankruptcy and a bad credit rating.

Never too early to learn budgeting

Many economists suggest that parents and children should engage in regular, constructive conversations about money matters to give kids a solid foundation for financial wellbeing. This advice may stem from the fact that kids are not receiving financial education courses at school. According to a survey conducted in 2012 by the National Endowment for Financial Education revealed that 89 percent of K-12 teachers agree that students should either take a financial education course or at least pass a competency test. The survey discovered that very few teachers are prepared to teach this subject with any fluency. In essence, for most Americans planning for financial literacy has become a do-it-yourself proposition.

“Teachers are the single most important influence on student success,” said Vince Shorb of the National Financial Educators Council. “The qualifications of financial educators have direct impact both on short-term student outcomes and on their long-term financial wellbeing. Teaching financial literacy early will result in positive influence for that student later on in life. For instance, college graduates spent 16 years gaining skills that will help them command a higher salary, yet little time is spent on helping them save, invest and grow their money.”

Credit card is not ‘free money’

Early financial literacy can have many benefits. The Jump$tart Coalition suggests that because many young people have little understanding of finance and economics, they’ll likely spend their 20s and 30s spending and borrowing without knowing that interest builds up or that credit cards aren’t free money. The Internet is a strong driver toward economic insolvency. When the average child goes online, he or she can find much more than a few gadgets or “must haves” necessary in their life. And when they’re old enough to buy something (with a credit card), online shopping makes it far too easy to get in debt. There are more debt options online. The Federal Reserve released a report in 2012 that revealed 513,000 student credit card accounts were opened in 2008, and by 2009 there were approximately 2 million student credit cards circulating nationwide. Apparently, agreements between banks and colleges have made it easy for students to accumulate debt—more students are paying tuition with credit cards every year in addition to charging text books and other expenses.

“Credit card debt is completely within your control,” said Orman. She should know, having spent the past 30 years as one of the world’s foremost financial advisors. USA Today once called her a “one woman financial advice powerhouse.” Orman is among the people who say “pay off” and then “tear up” those costly credit cards and, if possible, see if you can qualify for a balance transfer that offers a low or zero percent introductory interest rate for the first six to 12 months.

Student loans more expensive

“Move your high-rate credit card to that new one,” she said. “Don’t use the card for any new charges, and push yourself to pay off the balance as soon as possible. If you have a high-interest credit card, always send in some extra money each month. Your goal is to get the costliest balance paid off first, and keep doing this until you zeroed out the balances on all your cards.”

Many college students between 18 and 25 have at least one credit card. By the time they graduate, however, most of these young people will have four or more credit cards with an average balance of $3,000. The students are taking out more credit each year they’re in school. The Fed report suggested that if these young people had financial literacy courses while in secondary school, they’d likely graduate from college with less debt.

Student loans cost more today. In 2011, borrowing for college accounted for a greater slice of the debt pie than did credit cards, and while the costs of education have grown, incomes and government aid aren’t keeping pace. Students are taking on more debt, and with banks tightening their belts since the dawn of the Great Recession, many young people are taking a chance on risky sub-prime loans. The volatility of such borrowing—coupled with an increase in credit card debt—has resulted in more Millennials considering bankruptcy. A USA Today poll conducted in 2005 found that almost one in five Americans ages 18 to 24 years have declared bankruptcy. This age bracket is reportedly the fastest growing demographic in bankruptcy court; most bankruptcies are the result of accumulated debt, so people as young as 15 may be already on the road to bankruptcy and poor credit.

U.S. News and World Report in 2014 released the results of two studies showing that while the estimated $1 trillion in student loan debt affects individuals from all walks, women and minorities experience some of the greatest repercussions of student debt. The report revealed that 27 percent of Black bachelor’s degree holders had more than $30,500 in loans, compared with 16 percent of White bachelor’s degree holders. Those African Americans, the report indicated, also have higher rates of unemployment, which directly impacts their ability to repay student loans. Prudential Financial conducted a similar survey and reported that college-educated Blacks are twice as likely to have student loan debt, compared with all college-educated Americans.

Borrowing can be another financial trap in which too many Americans, particularly Blacks, find themselves ensnared. And one of the biggest problems comes because of the use of so-called payday loans.

A payday loan (also called a payday advance, salary loan, payroll loan, small dollar loan, short term, or cash advance loan) is a small, short-term unsecured loan. The loans are also sometimes referred to as “cash advances,” although that term can also refer to cash provided against a prearranged line of credit such as a credit card. Payday advance loans rely on the consumer having previous payroll and employment records. Legislation regarding payday loans varies widely between different countries, nations, states or provinces. But use of these short-term loans, often secured from a storefront location ballooned in the 1990s in part because of the lack of traditional financial institutions in communities. There have been accusations by some community activists that these lenders particularly target low-income and minority communities.

As a result, many government entities have stepped in to prevent usury (unreasonable and excessive rates of interest). They also limit the annual percentage rate (APR) that any lender, including payday lenders, can charge, and some jurisdictions outlaw payday lending entirely. While others have very few restrictions on these businesses, in the United States, the rates of these loans used may be restricted in most states by the Uniform Small Loan Laws (USLL), with 36-40 percent APR generally the norm.

According to a study from the Safe Small-Dollar Loans Research Project at the Pew Charitable Trusts, about 5.5 percent of U.S. adults spend $7.4 billion annually at payday lenders. The near 12 million annual borrowers tend to use the short-term loans in different ways than lenders market them. Rather than using the money for unexpected emergencies, the loan proceeds tend to be used for everyday living expenditures. The study found that 10 percent of renters have used a payday loan, compared to 4 percent of homeowners. Lower-income Americans are, perhaps, more likely to take out the loans as well, with 11 percent of people making between $15,000 and $25,000 having used a payday loan; the proportion decreases as you move further up the income ladder. Twelve percent of African Americans have taken out payday loans between 2007 and 2012, more than twice the figure for Whites (4 percent), and twice the figure for Hispanics and other races or ethnicities (both at 6 percent).

A recurring stumbling block for African Americans is money management. Namely, among the older generation, many are concerned that they are inadequately prepared for retirement because of their severe lack of savings and financial investments. There is an urgent need for financial literacy education throughout America, but especially for those in the African American community.