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.

Highlights from the 2019 P-Fin Index

  • Those with greater financial literacy are more likely to save and plan for retirement. Eighty-eight percent of those with high financial literacy save for retirement on a regular basis, compared to 37 percent of those with low financial literacy.
  • Those with greater financial literacy are more likely to have non-retirement savings. Eighty-six percent of those with high financial literacy have non-retirement financial savings, compared to 34 percent of those with low financial literacy.
  • Those with greater financial literacy have a greater propensity to track spending. Sixty-three percent of those with high financial literacy usually or almost always tracked their spending, compared to 54 percent of those with low financial literacy.
  • Those with greater financial literacy are less likely to be financially fragile. Eighty-five percent of those with high financial literacy could certainly come up with $2,000 if an unexpected need arose within the next month, compared to 25 percent of those with low financial literacy.

Summary of findings from the 2019 P-Fin Index

  • Many Americans lack personal finance knowledge that enables sound financial decision making. On average, U.S. adults answered only 51% of the P-Fin Index questions correctly.
  • Comprehending risk continues to be the functional area where financial literacy tends to be lowest. Similarly, personal finance knowledge continues to be highest in the area of borrowing and debt management.
  • The percentage of P-Fin Index questions answered correctly increased from 49% in 2017 to 50% in 2018 to 51% in 2019. These changes are too small to conclude that financial literacy levels are actually increasing.
  • Financial Literacy is strongly linked to financial education. There is a 16 percentage point differential in questions answered correctly between individuals who have participated in a financial education class or program and those who have not received financial education.

This long term collaboration with the TIAA Institute has allowed us to study not only the level of personal finance knowledge but also to assess its changes over time. Findings from this third survey show that we need to step up the effort to improve financial knowledge among the U.S. population

— 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.