A Lack of Financial Knowledge Cost Americans $1,819 in 2022

That's a lot of money to be giving up.

It's unfortunate that personal finance is a topic that's generally not taught in school (though many lawmakers are fighting to change that, and 25 states have actually introduced legislation to include personal finance in school curriculum). What's even more unfortunate is that a lack of personal finance knowledge can end up costing consumers money.

A recent survey by the National Financial Educators Council found that a lack of financial knowledge cost the average consumer $1,819 in 2022. That's a terrible amount of money to lose at a time when living costs are so high.

If you feel you never got the financial education you deserve, it's not too late to get schooled. There are loads of online resources you can tap to learn more about everything from budgeting to establishing a savings plan. But for now, here are three basic pieces of financial knowledge that might help your personal situation improve.

1. Savings accounts are a great place for emergency cash

This is actually going to be a two-in-one lesson. First, you should aim to have an emergency fund with enough cash to cover at least three full months of essential bills. Without one, you might quickly fall behind on your obligations or resort to debt in the event of a lost job. Or, you might rack up debt the moment you're hit with an unplanned expense.

Meanwhile, the best place for your emergency fund is none other than a savings account. That way, your money is protected, and you can earn some interest on it while you're not using it.

2. Credit card balances can be very costly

Many people don't realize how expensive it can be to carry a credit card balance forward rather than pay one off in full every month. When you put money into a savings account, it gets to earn interest. That's extra money you get to keep. When you carry a credit card balance, it accrues interest. That's money you pay that your credit card company gets to keep.

Worse yet, many credit card companies compound interest on a daily basis. This means that for every single day you don't pay your balance in full, it costs you even more. So if you're going to use credit cards, do your best to pay their balances in full by the time they're due.

3. It pays to invest money you don't need for emergencies or near-term goals

Any money you have earmarked for emergencies or goals you want to achieve within the next five years should sit in a savings account. But for longer-term goals, investing in a brokerage account or IRA is probably a better bet.

You might earn twice the return on your money in one of these accounts. And while investing carries the risk of losing money that doesn't come into play when you stick to a savings account, the financial upside tends to make it worthwhile.

How do you choose between a regular brokerage account and an IRA? Well, you'll need to think about what you're investing for, what tax benefits you're looking for, and how much flexibility you want with your money. You can take a withdrawal from a regular brokerage account at any time without penalty, and you can invest any amount you want.

With an IRA, you'll be subject to a contribution limit that changes every year, and you'll be penalized for removing funds before reaching age 59 ½. That's because an IRA is an account specifically designed to help you save for retirement, and the IRS doesn't want you tapping that account prematurely. But in exchange for agreeing to those rules, you get a tax break on your money when you invest in an IRA.

With a traditional IRA, you don't get taxed on your contributions. With a Roth IRA, you don't get taxed on your withdrawals. So either way, you benefit financially.

Being in the dark about personal finance matters could cost you money. Do your best to address knowledge gaps so you don't end up struggling financially.