Financial Literacy Is Falling. That Makes Defining Wealth Even More Important.
Key Takeaways
Financial literacy helps people evaluate choices, but emotions, habits, and family dynamics also shape what they do.
Defining what wealth is to them, can give families a clearer basis for decisions about spending, risk, and legacy.
Families with significant assets and business owners face different kinds of complexity, but both benefit from connecting financial decisions to a purpose.
More Information Does Not Always Bring More Clarity
Financial advice is easier to find than ever. Headlines, social media, and digital tools can put answers in front of us within seconds. Yet the 2026 TIAA Institute–GFLEC Personal Finance Index found that U.S. adults answered an average of 47% of its 28 questions correctly - the lowest result in the survey’s 10-year history.
That finding raises a question beyond how much people know: How do they make decisions when the stakes are high? Financial choices are rarely made in a vacuum. Fear, confidence, past experiences, and family expectations can affect what someone does with the information they have.
More knowledge is valuable. So is recognizing when emotion may be driving a decision. A person might understand that diversification reduces concentration risk, for example, yet hesitate to sell shares in a company that has shaped their career. Knowing the principle and acting on it are different challenges.
Start With What Wealth Is For
Account balances and net worth statements tell part of a financial story. They do not tell a family what it wants its resources to accomplish. For one family, wealth may mean the freedom to retire earlier or work differently. For another, it may mean helping children, caring for aging parents, or supporting causes they value. Those priorities can coexist, but they may compete for the same dollars.
A clear definition of wealth will not settle every choice. It can, however, make tradeoffs easier to evaluate. Instead of asking only, “Can we afford this?” a family can also ask, “Does this move us closer to the life we want our money to support?”
When Family Wealth Grows, So Does the Need for Conversation
A family with trusts, real estate, business interests, and charitable plans may have sophisticated documents in place. Family members may still hold very different views about the purpose of that wealth.
One generation might see money primarily as security. Another might see it as freedom or a responsibility to others. If those views remain unspoken, even a carefully designed plan can leave people uncertain about the decisions they will eventually need to make. Financial literacy in this setting involves more than learning terminology. It means helping family members understand the choices they may face, the responsibilities that come with those choices, and the values behind the plan. Conversations about what wealth is for can be as useful as conversations about how it is invested.
Business Owners Face a Different Kind of Concentration
For many business owners, the company is both a source of income and a substantial part of their net worth. Investing more in the business may support its growth, while moving money into personal savings can help build security outside it. Neither choice is automatically right.
Owners often make decisions quickly and carry considerable confidence in the business they have built. Those strengths can also make it difficult to step back and ask how much of the family’s future depends on the company continuing along its current path.
Questions such as when to take profits, how much to save personally, and what would happen after an unexpected disruption are practical planning questions. They also depend on what the owner wants wealth to provide beyond the business.
A Practical Next Step
Begin by writing down what you want your money to make possible for you, your family, and others who matter to you. Then consider a decision you are facing now. Does each available option support those priorities? What might you gain, give up, or leave exposed?
The answers may show where you need more information, a family conversation, or a closer look at the numbers. If you would like help working through those questions and defining what wealth means to you, a Novi advisor can help connect the decision to your broader financial plan, financial literacy, and defining wealth.
