The state of financial education in America is awful...
The TIAA Institute-GFLEC Personal Finance Index measures financial literacy. One measurement in the index includes a 28-question survey that covers eight basic areas of financial knowledge. In the 2023 survey, the average person answered 48% of the questions correctly. That's down from 50% in 2017. And Gen Z adults ranked the worst.
This lack of financial literacy is why lenders often prey on college students with aggressive marketing techniques that haven't improved much since the CARD Act in 2009. According to a 2019 report from education company Everfi, 36% of college students have at least $1,000 in credit-card debt (not to mention the tens of thousands of dollars in debt thanks to student loans).
The problem has been going on for generations.
So we want to hear from you...
What do you wish you'd known about finance and investing when you were younger? What's the best piece of advice you would give to a young person graduating?
For our younger readers, what financial questions do you have that you're too embarrassed to ask?
Send all of your stories, suggestions, and questions to [email protected]. And keep your eye out in the coming weeks as we'll share some of what you send us!
Now, let's get into this week's Q&A...
Q: I bought a new 2019 Hyundai Ioniq for $23k with no [government tax credits]. 60K miles later and 0 problems, on this NON plug-in hybrid, I get a consistent 60 mpg.
What's the problem? Why no emphasis and development on NON plug-in hybrids with many advantages over all the plug-in models? – T.S.
A: Our in-house auto expert Brady Holt wrote a pair of articles last month about the pros and cons of owning electric vehicles ("EVs") and plug-in hybrids. T.S., you alluded to one of those advantages: federal tax incentives. From the perspective of a car buyer, if the government wants to pay us to buy certain cars, we won't refuse its cash.
That being said, you're absolutely right that there's a lot to love about a conventional hybrid car like the Toyota Prius or your 2019 Hyundai Ioniq. These hybrids use electric motors so their gasoline engines don't have to work as hard, which improves gas mileage. But you charge their electric batteries using the gasoline engine and energy captured from the braking system, so you don't have to worry about plugging in.
This technology works beautifully... To use today's equivalent to your Ioniq, the 2023 Hyundai Elantra Hybrid gets 17 mpg more than the gas-only Elantra model – and it's more powerful, too.
The key advantage to plug-in cars over hybrids is that they go from using less gasoline to using little to none. If you're able to plug in a car and wouldn't regularly exceed its electric range, it can significantly reduce your fuel bill.
In 2019, Hyundai sold three Ioniq variants: the hybrid that you bought, a plug-in hybrid EV ("PHEV"), and a fully electric version. The U.S. Environmental Protection Agency ("EPA") estimates that the Ioniq PHEV can travel up to 29 miles on an electric charge. After that, it would get 52 mpg using gasoline. Meanwhile, the fully electric 2019 Ioniq could travel an EPA-estimated 124 miles per charge.
And when you charge at home, electricity costs significantly less than gasoline for most U.S. markets... The EPA estimates that the average all-electric Ioniq would cost barely half as much to drive per mile versus the hybrid.
Of course, there are indeed downsides to these plug-in versions... You need to be able to plug them in to reap their benefits. They require bigger, more expensive batteries. And with the electric version in particular, your drives are kept on a short leash. Even when there are cost advantages for many people, there are also many folks who wouldn't benefit from plug-in cars.
Still, there are two main reasons why plug-in cars get so much more attention...
First, they produce zero tailpipe emissions, which is a huge deal to many car buyers and policymakers. (Again, we aren't delving into that argument here, but it's a big reason why there's so much fervor around them.) Secondly, plug-in cars are newer and more exciting. It's like how hybrids got so much coverage 20 years ago and celebrities queued up for Priuses. Now, the idea of pairing a gasoline engine with an electric motor is no longer headline news.
Fortunately, that doesn't mean carmakers have forgotten about hybrids. Consider this... Twenty years ago, the Prius got an EPA-estimated 41 mpg. The 2023 Prius gets up to 57 mpg – while making an extra 82 horsepower. That's the result of significant research and development, even if you won't hear politicians talking about Priuses anymore.
And hybrid choices have proliferated... Of last year's top 20 best-selling vehicles in the U.S., nearly half have a non-plug-in hybrid option, including three of the top five.
Rest assured, you're not alone for loving your hybrid. And we wish you many fuel-sipping miles ahead!
What We're Reading...
- Did you miss it? This is the No. 1 tool to build your financial literacy.
- Something different: Are you a victim of a "brushing" scam?
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
April 28, 2023