Transgender woman drinking tea looking out the window at home


Getty Images


The investment information provided on this page is for educational purposes only. NerdWallet does not provide advisory or brokerage services, and does not recommend or advise investors to buy or sell particular stocks, securities or other investments.

Money management is an essential life skill, but most American adults would fail a financial literacy test. Consider the results of a survey designed to measure financial literacy, called the TIAA Institute-GFLEC Personal Finance Index. On average, American adults answered only 50% of their financial literacy questions correctly in 2022.

In other words: if you find money confusing, you are far from alone. But the reasons you’re confused may have more to do with how our brains work than how money works. Understanding some of the common obstacles, as well as strategies for dealing with them, could help you finally get your finances under control.

People also read…

Money is a new language

You wouldn’t expect to have a fluent conversation in Madrid or Mexico City if you only knew a few words of Spanish. Likewise, personal finance is full of terms, jargon, and concepts that take time to learn.

“Entering the world of money is like stepping into a whole new culture and learning a new language,” says Ed Coambs, a certified financial planner and couples therapist in Charlotte, North Carolina.

You shouldn’t feel stupid for not understanding everything instantly, and no one should make you feel that way. However, it can be harder to learn if we come across people who are judgmental, condescending or dogmatic – which unfortunately describes many people who have mastered personal finance lingo.

“Many financial experts, professional or not, can become more or less authoritative: “Yes, I know what is best for you. That’s what you should be doing,” Coambs says.

People with a rigid approach to personal finance may not understand the culture and life experiences that shaped you. They may insist that you spend every dollar you can on paying off debt or saving for retirement, for example, but you may think it’s important to tithe your church or support your aging parents.

Rather than dictating how you should spend your money, helpful counselors meet people where they are, says Rachael DeLeon, acting director of the Association for Financial Counseling & Planning Education, a nonprofit foundation that administers the financial advisory degrees.

“It’s understanding: what are your values? What is important to you? And how do you make it work in your own financial situation? DeLeon said.

Money is emotional

For many people, money evokes strong and often negative emotions. For example, if you have trouble managing your finances, you might be so embarrassed that you try to avoid talking or even thinking about money.

“That’s what’s really stopping people from making money,” Coambs says. “They’re ashamed of not knowing, and they feel like they should know.”

Early painful experiences often shape how we view money, says Coambs, author of “The Healthy Love & Money Way: How the Four Attachment Styles Impact Your Financial Well-Being.” Listening to parents arguing over money or suffering financial difficulties can be traumatic, leaving us convinced that money is dangerous or shameful.

Coambs suggests discussing your feelings about money with caring, compassionate people. This could include an empathetic financial advisor, financial therapist, or trusted, knowledgeable friends.

“The action is based on the feeling of safety for many of us,” says Coambs. “Until we feel safe and accepted, we are generally going to feel stuck and blocked.”

Money is collaborative

Fear is another common emotion people feel about money: the fear of making a mistake, of not having enough, or of being scammed or misled.

“There are a lot of predators in this space, and it’s hard to know who to trust,” DeLeon says.

Education is crucial. You can learn more about personal finance basics from trusted sources, such as the Consumer Financial Protection Bureau or the JumpStart Coalition, which focuses on financial literacy for young people, DeLeon says.

But you can also hire people to help you. DeLeon recommends paid advisors, which means that they are only compensated by the fees paid by their clients rather than by commissions or other financial arrangements that could influence their advice.

Look for advisors who are fiduciaries, which means they are required to put your interests before their own. Fiduciary advisors include CFPs and individuals with credentials offered by DeLeon’s organization, AFCPE, including Certified Financial Advisors and Financial Fitness Coaches.

Currently, the AFCPE offers free virtual financial advice sessions. You can find out more on the AFCPE website. Additionally, your employer, 401(k) provider, bank, or credit union may also offer free or low-cost financial advice.

With money, knowing who to ask is more important than having all the answers ourselves, DeLeon says.

“Not everyone needs to be a personal finance expert,” says DeLeon.


Ask a Nerd: What Are the Signs I Need a New Bank?

My favorite emails over the past few months have been from my bank letting me know that the annual percentage return on my savings has increased and the overdraft…


Why a teacher changed careers and gave up loan forgiveness

In my first lesson of the day, I asked my students, or rather their avatars, a question on our online classroom screen. I waited for a…


Should you ask for a refund on student loan payments?

Hundreds of thousands of borrowers have made payments on their federal student loans since forbearance began in March 2020, taking the opportunity to pay down their balances. Now that…


Does your bank greenwash?  Here's how to check

Your bank plays a role in climate change through its loans and other actions. But does your bank have a positive environmental impact? It can be difficult to know. Through…


4 travel card perks that might not be as valuable as you think

Find out which credit card travel perks are losing value and if they’re still worth pursuing.


The Other Big Student Loan News: Changes to Repayment

This week, all eyes were on student loan forgiveness. And that makes sense: Borrowers have waited months for the president to make a decision on his campaign promise to cancel…


The high cost of smoking in your car

Smoking in your car is harmful to you and your passengers, but it also hurts the resale value of your car. Smoking can reduce car trade-in value by as much as…


Biden writes off $10,000 in student debt.  Here's who gets it

After months of rumors and speculation, President Joe Biden on Wednesday announced details of a broad vision for student loan debt repayment and cancellation. By decree,…


Federal Student Loan Payments Suspended Through 2023 - What's Next

Nearly 37 million federal student loan borrowers get an additional four months of payment deferment. The White House cited the current high rate of inflation as the main reason…

This article was written by NerdWallet and was originally published by The Associated Press.