The TIAA Institute-GFLEC Personal Finance Index

The TIAA Institute-GFLEC Personal Finance Index: The State of Financial Literacy Among U.S. Adults

Authors of Recent Report
Paul J. Yakoboski, TIAA Institute
Annamaria Lusardi, GFLEC
Andrea Hasler, GFLEC

About the 2018 Survey

The TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) measures knowledge and understanding which enable sound financial decision-making and effective management of personal finances among U.S. adults. The P-Fin Index was developed by the TIAA Institute and the Global Financial Literacy Excellence Center, in consultation with Greenwald & Associates. The 2018 survey was fielded online in January 2018 with a nationally representative sample of U.S. adults, ages 18 and older, and completed by 1,012 individuals. The P-Fin Index is an annual survey and the 2018 data represents the second wave of the P-Fin Index. Yearly waves enable analyses of personal finance knowledge over time.

The index builds from the existing academic research on financial literacy and capability. It is unique in its capacity to examine financial literacy across eight areas of personal finance in which individuals routinely function. This capacity to produce a nuanced examination of financial literacy across different areas of personal finance is what distinguishes the P-Fin Index from other surveys. The index is based on responses to 28 questions across eight functional areas: earning, consuming, saving, investing, borrowing/managing debt, insuring, comprehending risk, and go-to information sources. Overall, the P-Fin Index highlights the gap between current personal finance knowledge levels and the level needed for sound financial decision-making in the normal course of life.


Summary of Main Findings

  • Many Americans lack personal finance knowledge that enables sound financial decision making. On average, U.S. adults answered 50% of the 28 survey questions correctly.
  • Sixteen percent demonstrated a relatively high level of personal finance knowledge and understanding, i.e., they answered more than 75% of the index questions correctly, while 21% showed a relatively low level, i.e., they answered 25% or fewer of the questions correctly.
  • Personal finance knowledge is lowest in the area of comprehending risk with only 35% of questions on risk answered correctly, on average.
  • Personal finance knowledge is highest in the area of borrowing and debt management. On average, 60% of the borrowing questions were answered correctly. Knowledge and understanding may emerge from confronting accumulated debt, often from early on in the life cycle.
  • Financial literacy is significantly higher among men than women; with a share of 21% of men answering 75% of the P-Fin Index questions correctly compared to a share of 12% among women.
  • Personal finance knowledge is positively correlated with both general education and financial education, a finding consistent with previous research.
  • Individuals with greater personal finance knowledge are more likely to have positive personal finance experiences, such as planning and saving for retirement and for other reasons.
  • Overall, these figures are consistent with the findings from the 2017 P-Fin Index.

Less than one in five U.S. adults demonstrated a relatively high level of personal finance knowledge by answering more than 75% of the survey questions correctly. Low levels of financial literacy, among not only the young but also people close to retirement, show we need to step up the effort to promote financial knowledge across the entire population.

— Annamaria Lusardi