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.

One-quarter of employed adults decreased their retirement saving in 2022 because of inflation’s impact on their finances. This figure was 40% among Hispanic workers, a figure significantly higher than that of their Asian, Black, and White peers.
From January 2022 to January 2023, the share of adults who typically find it difficult to make ends meet increased from 24% to 30%; the share who are debt constrained increased from 20% to 26%; and those without nonretirement savings sufficient to cover one month of living expenses increased to 39% from 32%.
On average, U.S. adults correctly answered only 48% of the 28 index questions in 2023. This figure has hovered around the 50% mark since the inaugural 2017 survey.
Functional knowledge is consistently lowest in the realm of comprehending risk. On average, only 35% of these questions were answered correctly in 2023.
Financial literacy levels among Asians and Whites are roughly equal. Likewise, financial literacy levels among Blacks and Hispanics are roughly equal, albeit at lower levels.
Financial literacy tends to be low across generations, but particularly so among Gen Z followed by Gen Y—37% of Gen Z and 30% of Gen Y could correctly answer only up to seven of the 28 index questions.
Financial literacy among women consistently tends to lag that of men. The financial literacy gender gap exists among racial and ethnic groups, as well as generations.

Analogous to overall financial literacy, functional knowledge levels among women tend to lag those of men, and the gender gap is statistically significant across all functional areas.
Financial literacy is lowest among Gen Z in seven of the eight functional areas. Comprehending risk is the one area where functional knowledge is essentially equal across generations, albeit at very low levels.
Compared to those with a very high level of financial literacy, those with a very low level are more than four times as likely to have difficulty making ends meet in a typical month; nearly three times as likely to be debt constrained; three times more likely to be financially fragile; more than four times as likely to lack emergency savings sufficient to cover one month of living expenses; and more than three times as likely to spend 10 hours or more per week on issues and problems related to personal finances.
The same relationship between financial literacy and financial well-being holds across demographic groups. Among both men and women, among each of the four racial and ethnic groups, and among each generation, there is typically a double-digit decrease in the percentage experiencing a poor outcome with each financial well-being indicator when comparing those with relatively high financial literacy to those with relatively low financial literacy.

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.

Every year the P-Fin Index findings are troubling, but this year more than ever, we are seeing how low levels of financial literacy in a volatile economy can lead to problems. We must focus on helping people of all ages, especially those who are the most vulnerable.