You don't know what you don't know.
And that's the whole problem with financial literacy. Scrambling to pay bills or struggling with credit card debt is just the tip of the iceberg.
Can you manage your own finances successfully if you don't understand the relationship between bond prices and interest rates?
Ric Edelman, founder of Edelman Financial Engines, says the answer isn't that clear-cut.
"Yes, your actions matter more than your attitude," Edelman said. "But your attitude often colors your actions."
The problem with not knowing as much as you could: Not only are you not managing things that well, but you might also be missing out.
For instance: You got a new job, and your employer asked if you wanted to participate in the 401(k) plan. You turned it down because you think you're too young to have to worry about retirement. Or you tell yourself you'll get to it later.
Every day, we are faced with financial decisions — and most of us don't have the information we need to make good decisions.
Several things can go wrong, but one of the most common is not recognizing the total costs of ownership.
When people shop for a new car, they usually ask the dealer what the monthly cost will be. Wrong question. Don't just think about the sticker price or the monthly payment when you scout how much you can afford each month.
Based on the financing, the dealer says it will be $300, and people can see that fitting into their budget, Edelman says. But they are not factoring in how much it will cost to buy fuel based on that vehicle's miles per-gallon ratio. Other costs to consider: tolls, parking, insurance, general maintenance, garage fees. Don't forget that some vehicles cost much more to insure than others.
Without looking at the total cost picture, you could take on an expense that seems affordable at first, but really isn't when you add up the other fees.
A similar disconnect can occur when people go home shopping. They look at the price of the house, but not the maintenance and repair expenses.
"The bigger the house, the more you'll spend on heat and air conditioning," Edelman said.
If you're a first-time homeowner, you may need more furniture than your apartment or previous home had. Closing costs, annual taxes, utilities and sometimes homeowner association fees also have to be calculated to arrive at a realistic price tag. These costs add up, and none are incurred by renters, Edelman says. Taking on more than you can afford makes people house rich and cash poor: Every cent you have will go into the house.
"Many people don't anticipate the real cost of college when shopping for schools," Edelman said.
You'll pay more than just tuition, room and board to get that degree. There are fees for various classes and activities. Textbooks are a significant expense.
But the No. 1 cost parents don't factor in is the inflation of college. Costs are growing on average about 8% a year, says Edelman. It may not be just four years.
"The average student takes six years to get a degree," Edelman said. "And the cost of that sixth year is going be twice as expensive as their freshman year."
If the cost of a year of college is $30,000, many parents multiply that amount by four — but that simply may not hold true for your specific case.
Changing your major or transferring to another school can mean that prior courses aren't accepted, and you'll need to take more than the standard 120 credits.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.