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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.

How financial literacy varies among U.S. adults

DEMOGRAPHIC REPORTS

Highlights from the 2022 P-Fin Index

  • Many Americans function with a poor level of financial literacy—a consistent finding over the first six years of the P-Fin Index. On average, U.S. adults correctly answered only 50% of the index questions in 2022. Eighteen percent correctly answered over 75% of the index questions, while 23% correctly answered 25% or fewer of the questions.
     
  • Asian Americans were oversampled for the first time with the 2022 P-Fin Index, along with Black and Hispanic Americans. Financial literacy levels among Asian Americans and Whites tend to be equal; the former correctly answered 54% of the index questions, on average, and the latter 55%. Analogously, functional knowledge levels among Hispanic and Black Americans tend to be equal.
     
  • It is evident again that greater financial literacy tends to translate into higher financial well-being and lower financial literacy is generally associated with lower financial well-being.
  • Comprehending risk is again the area where functional knowledge tends to be lowest among U.S. adults. On average, 36% of these questions were answered correctly in 2022, a figure lower than its 2017 level (39%).
     
  • Financial literacy tends to be low within each of the five generations comprising the U.S. adult population, but particularly so among those in early adulthood. The average percentage of P-Fin Index questions answered correctly in 2022 by Gen Z and Gen Y is 42% and 46%, respectively. The analogous figure among baby boomers and the Silent Generation is 54% for each.
     
  • The same link between financial literacy and financial well-being holds across race and ethnicity groups. For each well-being indicator, there is typically a double-digit decrease in the percentage of adults experiencing a poor personal finance outcome when comparing those with relatively high financial literacy to those with relatively low financial literacy across the four groups.

The consistently low financial literacy levels among U.S. adults and, particularly, among the most vulnerable demographic subgroups is troubling. These findings are a call to action! With financial literacy month underway, I want to invite everyone to join us in the effort to improve financial literacy and financial wellbeing for all.

— 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.