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The TIAA Institute-GFLEC Personal Finance Index (P-Fin Index)

The TIAA Institute-GFLEC Personal Finance Index (P-Fin Index)

The TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) measures knowledge and understanding that enable sound financial decision making and effective management of personal finances among U.S. adults. The P-Fin Index is an annual survey developed by the TIAA Institute and the Global Financial Literacy Excellence Center, in consultation with Greenwald & Associates. It is unique in its breadth of questions and its coverage of the topics that measure financial literacy. 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.

2021 P-Fin Index Results

Financial well-being and literacy in the midst of a pandemic

Financial literacy and well-being in a five generation America

Highlights from the 2021 P-Fin Index

  • Fielded in the midst of the COVID-19 pandemic, the 2021 TIAA lnstitute-GFLEC Personal Finance Index (P-Fin Index) provides critical insights into the state of Americans' personal finances along several dimensions during an environment of extended national and global stress-medical, societal and economic. Twenty-two percent of U.S. adults report they are unable to pay their bills in full and on time in a typical month, and 30 percent would not be able to cover an unexpected $2,000 expense.
  • Results from the P-Fin Index indicate that a significant portion of American adults still struggle with financial literacy. After four years of incremental growth in financial literacy, the percentage of P-Fin Index questions respondents answered correctly decreased by 2 percentage points in 2021, with respondents correctly answering only 50 percent of the questions.
  • Comprehending risk continues to be the area in which financial literacy is lowest, with U.S. adults on average correctly answering only 37 percent of questions on this topic.
  • We have seen Americans become increasingly motivated since the onset of COVID to improve their personal finances. Now is the time to focus on enhancing financial literacy as we look forward to life post-COVID.
  • Financial challenges and lower levels of financial literacy are significantly more prevalent among the Black and Hispanic communities who face structural inequities and longstanding institutional biases. Thirty-two percent of individuals in these U.S. demographic groups find it difficult to make ends meet in a typical month, compared to 18 percent of white Americans.
  • Fifty-six percent of Black Americans and 53 percent of Hispanics do not have non-retirement savings sufficient to cover one month of living expenses, compared to 35 percent of white Americans. Blacks and Hispanics correctly answered 37 percent and 41 percent, respectively, of the P-Fin Index questions, compared to white Americans, who correctly answered 55 percent.

Our data shows a direct link between financial literacy and financial well-being and demonstrates how knowledge can better equip Americans to face adverse economic conditions. Just as we need to address institutional barriers, we must also break down barriers to financial well-being as part of the path to economic recovery following the pandemic, and that includes greater access to financial literacy.

— Annamaria Lusardi

Information about the survey

The initial wave of the survey was fielded online in September 2016 to a nationally representative sample of U.S. adults, ages 18 and older. Each year, the survey oversamples a particular demographic group to better understand the financial literacy levels and financial behaviors of that group. Because the P-Fin Index is an annual study, future waves will enable trend analysis of overall personal finance knowledge, as well as knowledge in the different functional areas and across demographic groups.