April 2024
The TIAA Institute-GFLEC Personal Finance Index (P-Fin Index), now in its eighth year, annually assesses financial literacy among U.S. adults and examines the relationship between financial literacy and financial well-being. In addition to a robust measure of overall financial literacy, the P-Fin Index provides a nuanced analysis of personal finance knowledge across eight areas in which individuals routinely function. For the first time, the 2024 P-Fin Index also assessed basic retirement fluency, i.e., knowledge that promotes financial well-being in retirement.
Click here for the data brief associated with this report.
August 2023
Longevity literacy is an understanding of how long people tend to live upon reaching retirement age. It is particularly important since retirement income security requires planning, saving, and preparing for a period that is uncertain in length. Unfortunately, data from the 2023 TIAA Institute–GFLEC Personal Finance Index (P-Fin Index) demonstrate a lack of longevity literacy among the vast majority of U.S. adults. Using three new questions to measure longevity literacy, this report highlights two major groups in the population…
January 2023
Six years of data from the TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) clearly demonstrate that U.S. adults with greater financial literacy tend to have better financial well-being. This report shows that retirement readiness, a specific realm of financial well-being, likewise tends to be better among those with greater financial literacy. In addition, it shows that retirement readiness is also related to longevity literacy. While typically an overlooked factor, the importance of longevity literacy is not surprising since retirement income security inherently involves planning for the time that will be spent in retirement, which is uncertain.
September 2022
Abstract: Financial wellness programs in the workplace are the best ways to reach a vast majority of the adult population. This report is part of a more comprehensive study that focuses on a particular financial wellness program launched by Edelman Financial Engines (EFE) in April 2022 as a six-week challenge in a Fortune 25 company. This report aims to analyze the impact of the six-week challenge on financial knowledge, confidence, and behavior. Adopting a before-and-after design, we conduct the impact evaluation on 668 employees; we found that after being exposed to financial education resources, employees improved their financial knowledge (2.5 percentage points, p.p.), their self-assessed financial knowledge (4.5 p.p.), and their attitudes toward retirement planning (5 p.p.). Exposure to the six-week challenge might have also increased employees’ awareness of their financial issues, which may make them feel more anxious when talking about their personal finances (5 p.p.) and more worried about running out of money in retirement (5.5 p.p.). This report also includes insights on forward-looking behaviors, such as employees’ willingness to be savvier about their finances in the future and greater eagerness to talk with a financial counselor before taking important decisions. Our findings should interest both companies and researchers that are validating existing financial wellness tools and guiding stakeholders and policymakers toward future policies to improve financial wellness in the workplace.
July 2022
Abstract: Workplace financial education is crucial for helping working adults improve their financial well-being. This report shows the results of a six-week challenge called Fast Track to Financial Health, a joint project between Edelman Financial Engines (EFE) and the George Washington University’s Global Financial Literacy Excellence Center (GFLEC). The project aimed to gain critical insights into the financial well-being of employees at a Fortune 25 company. This unique initiative created a financial health score (the FinHealth Score) and provided personalized counseling and access to educational resources based on that score. Data gathered prior to the program showed middle-aged employees (35–54) and minorities to be among the groups most lacking in financial well-being. Moreover, female employees are less knowledgeable about financial topics and the most likely to have used EFE’s financial services in the past. Splitting the sample across different levels of financial exposure revealed that EFE users have a higher level of financial literacy and better financial health. Although the employees plan for retirement and have precautionary savings, 38% declared they feel anxious about their finances and retirement savings. This result is persistent even among employees who have used EFE services in the past. The report concludes that offering workplace financial wellness programs can help with employee retention and overall satisfaction.
April 2022
Summary: The TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) is an ongoing project now in its sixth year that annually assesses financial literacy among the U.S. adult population. The P-Fin Index is unique in its capacity to produce a robust measure of overall financial literacy plus a nuanced analysis of personal finance knowledge across eight areas in which individuals routinely function. The index relates to common financial situations that individuals encounter and can be viewed as a gauge of “working knowledge.” The P-Fin Index survey also includes indicators of financial well-being which enables examining the relationship between financial literacy and financial well-being.
October 2021
Summary: With five years of the Gen Z cohort now over age 18, the U.S. adult population spans five generations. This report uses data from the 2021 TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) to compare financial literacy across the Silent Generation, the Baby Boom Generation, Gen X, Gen Y (millennials) and Gen Z at this point in time. How well individuals navigate financial decisions throughout their lifetime depends, at least in part, on their financial literacy.
The P-Fin Index is a long-term project that annually assesses financial literacy among American adults. Gen Z was quota sampled when fielding the 2021 P-Fin Index survey which enables comparisons with the other generations, as well as a closer examination within the Gen Z adult population. The P-Fin Index survey also includes indicators of financial wellness along several dimensions and those too are examined across generations and within Gen Z.
October 2021
Abstract: The annuity take-up rate is lower than economic theory predicts.1 Using data from the 2018 National Financial Capability Study, we conduct an empirical analysis of individuals in the retirement-planning phase of the life cycle (ages 40–61) and individuals of retirement age (age 62 and over). We examine individuals’ balance sheets, financial situations, and retirement planning steps to understand the barriers to annuity ownership, and we identify the financial and sociodemographic factors that contribute to annuity ownership. We find that debt obligations, lack of access to liquidity, and low financial literacy are all likely barriers to annuity ownership; the annuity owners in our sample are more likely than the non-owners to have access to liquidity and to report higher levels of financial satisfaction. Results indicate that access to liquidity and to professional investment management are positively associated with annuity ownership. Furthermore, financial literacy could lead to improved take-up rates through improved access to liquidity. These findings lead us to conclude that efforts to improve individuals’ financial literacy levels may lead to enhanced retirement outcomes.
Click here for the executive summary associated with this report.
August 2021
Summary: In this report, we examine the concept and assessment of financial resilience and its associated factors, which include income and cash flow management, debt management, risk protection, and financial literacy. We use longitudinal data from before and after the Great Recession to evaluate the severity of its impact across subpopulations and how each subpopulation recovered. We find that each subpopulation faces unique challenges. Thus it would be inappropriate to promote a one-size-fits-all approach for building financial resilience.
Click here for the policy brief associated with this report.
April 2021
Summary: The economic impact of the COVID-19 crisis has brought to light the deeply rooted financial struggles that many Americans face. This paper shows that even before the pandemic, a substantial share of households was already anxious and stressed about their personal finances. The greatest levels of anxiety and stress were expressed by women, young adults, those with lower income, those with more financially dependent children, those who are not married, and those who are unemployed. In this paper, we analyze factors likely contributing to high levels of financial anxiety and stress. The empirical analysis is based on the FINRA Foundation’s 2018 National Financial Capability Study (NFCS) and complemented by findings from focus groups that were conducted in 2020. We find that lack of assets, high debt, and money management challenges are major contributing factors to high levels of financial anxiety and stress. We also find that financial anxiety and stress can have long-term consequences: those who are financially anxious and stressed are less likely to plan for retirement. Financial literacy seems to matter. Those who could correctly answer three questions designed to measure basic financial literacy are significantly less likely to feel financially anxious or stressed. Finally, focus group findings reveal that individuals who experience financial anxiety and stress engage in daily monitoring of their finances and make decisions that are informed by their financial worries.
Click here for the highlights and key findings of this paper.
Click here for the issue brief associated with this report.
April 2021
Summary: The TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) is an annual barometer of knowledge and understanding which enable sound financial decision making and effective management of personal finances among U.S. adults. It is unique in its capacity to examine financial literacy across eight areas of personal finance in which individuals routinely function. The 2021 data represents the fifth wave of the P-Fin Index.
Click here for the executive summary.
February 2021
Summary: We provide an in-depth examination of the financial well-being of Black and Hispanic women and the factors contributing to it, using the 2018 wave of the National Financial Capability Study. We document meaningful differences between Black and Hispanic women versus White women, in that the former are more likely to face economic challenges that depress financial well-being, due in part to longstanding institutional biases. Controlling for differences in socio-demographic characteristics, there are additional factors that contribute to financial well-being for Black and Hispanic women compared to White women. These include differential impacts of education, family structure, employment, and financial literacy. Our results imply that extant financial education programs inadequately address the needs of Black and Hispanic women.
February 2021
Summary: If today’s youth are to be full participants in society, they must be financially literate. To advance understanding of effective financial education methods, the Global Financial Literacy Excellence Center (GFLEC) conducted an experiment using Mint, a financial improvement tool offered by Intuit, whose financial products include TurboTax and QuickBooks. This study measures Mint’s effectiveness at improving students’ financial knowledge, attitudes, and behavior. Students at the George Washington University participated in a half-day budgeting workshop and were exposed to either Mint, which is a real-time, automated platform, or Excel, which is an offline, static tool. We find that participation in both workshops was associated with improved preparedness to have conversations about money matters with parents, a greater sense of financial autonomy, and an increased awareness of the importance of budgeting, but that participants in the Mint workshop were more likely to have a positive experience using the budgeting tool, to feel confident that they could achieve a financial goal, and to be engaged in budgeting one month after the workshop. Results show that even short financial education interventions can meaningfully influence students’ financial attitudes and behavior and that an interactive tool like Mint may have advantages over a more static tool like Excel.
February 2021
Summary: If today’s youth are to be full participants in society, they must be financially literate. To advance understanding of effective financial education methods, the Global Financial Literacy Excellence Center (GFLEC) conducted an experiment using Mint, a financial improvement tool offered by Intuit, whose financial products include TurboTax and QuickBooks. This study measures Mint’s effectiveness at improving students’ financial knowledge, attitudes, and behavior. Students at the George Washington University participated in a half-day budgeting workshop and were exposed to either Mint, which is a real-time, automated platform, or Excel, which is an offline, static tool. We find that participation in both workshops was associated with improved preparedness to have conversations about money matters with parents, a greater sense of financial autonomy, and an increased awareness of the importance of budgeting, but that participants in the Mint workshop were more likely to have a positive experience using the budgeting tool, to feel confident that they could achieve a financial goal, and to be engaged in budgeting one month after the workshop. Results show that even short financial education interventions can meaningfully influence students’ financial attitudes and behavior and that an interactive tool like Mint may have advantages over a more static tool like Excel.
November 2020
Summary: The TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) provides an annual measure of overall financial literacy among the U.S. adult population, plus a nuanced analysis of personal finance knowledge across eight functional areas. The 2020 P-Fin Index survey was fielded in January 2020 and included an oversample of women. This enables examining the state of financial literacy and financial wellness among U.S. women immediately before the onset of COVID-19. A more refined understanding of financial literacy among women, including areas of strength and weakness and variations among subgroups, can inform initiatives to improve financial wellness, particularly as the United States moves forward from the pandemic and its economic consequences.
September 2020
Summary: The financial situation of African Americans lags that of the U.S. population as a whole, and of whites in particular. Simple economic indicators illustrate the gap. While 66% of African Americans report that they are doing at least OK financially, the comparable figure among whites is 78%.1 Median household income among African Americans was $35,400 in 2016; median household income of whites was $61,200. African American household net worth was $17,600 in 2016, and 19% had zero or negative net worth; the analogous figures for white households were $171,000 and 9%, respectively. The gap is evident in more nuanced indicators, as well.
This report uses data from the third wave of the TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) to examine the current state of financial literacy among African American adults and the link between financial literacy and financial wellness. Financial literacy is knowledge and understanding that enable sound financial decision making and effective management of personal finances. As such, greater financial literacy contributes to greater financial well-being.
May 2020
Abstract: In today’s economy, individuals are required to make important and complex financial decisions, many of them carrying long-lasting consequences. Yet significant numbers of people lack the basic knowledge needed to handle this responsibility and execute informed choices, underscoring the crucial and urgent need for financial education. In this study, we evaluate the financial capability and knowledge of the members of the Church Pension Group (CPG). Further, we contrast their money-management behavior with that of a comparison group from the 2015 National Financial Capability Study (NFCS). The main goal is to identify areas of strength and weakness among the members of the CPG. The results can be used to tailor personal finance education programs that match these consumers’ financial needs and expectations. CPG members do relatively well in answering the Big Three questions that measure financial literacy. They also engage less in expensive short-term money management practices and do more retirement planning than the NFCS subgroup. Despite the clergy members’ good performance against the comparison group, there is significant room for improvement. Tailored financial education can help prepare these people for the many financial decisions they face, which positively affects their financial security over the life cycle.
August 2020
Abstract: Millennials (individuals age 18–37 in 2018) are the largest, most highly educated, and most diverse generation in U.S. history, and they are already playing a pivotal role in society by making up the largest share of the work force. Consequently, their financial decisions promise to greatly affect the future of the U.S. economy. Millennials were deeply affected by the Great Recession of 2008 and have been disproportionately affected by the steadily rising costs of higher education and the ensuing student loan debt crisis. This generation now faces an additional economic crisis, resulting from the shutdowns due to the COVID-19 pandemic. In light of this, we assess in this paper the financial situation, money management practices, and financial literacy of millennials to understand both how their financial behavior changed over the ten years following the Great Recession and the situation they were in on the cusp of the current economic crisis (in 2018). Findings from the National Financial Capability Study (NFCS) show that millennials tend to rely heavily on debt, engage frequently in expensive short- and long-term money management, and display shockingly low levels of financial literacy. Moreover, student loan burden and expensive financial decision making increased significantly from 2009 to 2018 among young adults. Given these findings, we suggest that financial education programs tailored to the needs of young workers could play a crucial role in supporting financial decision making and helping them build financial resilience. Thus, we provide recommendations to employers who want to implement financial wellness programs targeted to their millennial employees. Effective workplace financial wellness programs include financial checkups, accessible and customized content, and cover a broad range of personal finance topics. A financially strong and healthy workforce provides the foundation for empowered and resilient communities.
Bruegel | Policy Contribution Issue n ̊15 | July 2020
Introduction: One of the first consequences of COVID-19 lock downs has been an immediate fall in household incomes. In a March 2020 survey for the G7 countries, 31 percent of households reported that the coronavirus had already impacted their incomes. Workers throughout the European Union have seen over time a reduction in weekly hours worked, temporary suspensions and even redundancies. Many self-employed workers and small businesses have been particularly impacted, and some might cease to operate altogether (Anderson, 2020). Governments have tried to compensate for this shock to income through direct support or deferral of tax and loan payments. The European Central Bank and other EU institutions have also put measures in place to provide governments with funds that will support health systems, businesses and households. In other words, a raft of measures has been introduced to supplement household incomes and mitigate these shocks.
But how well-prepared were households to handle shocks, a concept associated with financial fragility? As we show, two years before the pandemic hit, a substantial share of EU households reported that they would be unable to handle unexpected expenses. In some EU countries, many households had savings equivalent to just a few weeks of basic consumption. We also find that there are big differences in different countries and, thus, a need for more targeted policies to help families….
April 2020
Summary: The TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) is an annual barometer of knowledge and understanding which enable sound financial decision making and effective management of personal finances among U.S. adults. It is unique in its capacity to examine financial literacy across eight areas of personal finance in which individuals routinely function. The 2020 data represents the fourth wave of the P-Fin Index.
February 2020
Summary: Millennials (individuals age 18–37 in 2018) are the largest, most highly educated, and most diverse generation in U.S. history. Millennials are making financial decisions that will likely shape the future of the U.S. economy for the next 30 years, and they are doing so in an increasingly complex financial landscape.
In this study, we analyze data from the 2018 National Financial Capability Study (NFCS) to obtain an in-depth picture of millennials’ current financial situation, behaviors, and knowledge, and we compare the state of their personal finances to that of older working-age adults (individuals age 38-64). Further, we compare the personal finances, money management behavior, and financial literacy of millennials to young adults in the same age range (18-37) in 2009, 2012 and 2015 by using data from previous waves of the NFCS.
Asian Development Bank Institute | January 2020
Abstract
The financial technology (fintech) sector is revolutionizing traditional financial practices, yet little information exists on the users of these services. In this study, we examine untapped information from the 2015 National Financial Capability Study and the 2016 GFLEC Mobile Payment Survey to provide insights on the financial capability of American millennials who use mobile payments. Using data from both surveys, we find striking differences in financial capability between users and non-users. In particular, we reveal that users of mobile payments are more likely to overdraw their checking accounts, use credit cards expensively, borrow through alternative financial services, and withdraw from their retirement accounts. Even after controlling for socio-demographic factors, the results indicate that mobile payment users are more inclined to engage in behaviors that do not seem to follow good financial management practices.
Please see the publication by the Asia Development Bank Institute (ADBI) here.
November 2019
Forthcoming in the Journal of Retirement
The nation’s 44 million African-Americans account for 13% of the U.S. population and have a significant impact on the economy, with $1.2 trillion in purchases annually. Yet the financial well-being of African-Americans lags that of the U.S. population as a whole, and whites in particular. The reasons for these gaps are complex, but one area of importance in addressing them is increased financial literacy.
October 2019
Abstract: Increased individual responsibility for retirement saving and investing, together with the growing complexity of financial products, require that investors have financial knowledge and awareness. This report provides evidence of substantial differences across investor types. Workplace-only investors, whose exposure to investment decisions comes solely through participation in an employer-sponsored retirement plan, are much less equipped to manage their investments and are more likely to be women compared to active investors who have made investment decisions outside of an employer-sponsored retirement plan. Workplace financial wellness programs can provide an impactful way to reach a large share of the adult population and help them prepare to make sound financial decisions.
June 2019
We analyze debt and debt management of Americans nearing retirement age, and we show that older people have numerous financial obligations that can lead to financial distress. Drawing on the 2015 National Financial Capability Study and an extensive literature review, we find that lack of financial literacy, lack of information, and behavioral biases help explain the prevalence of debt later in life. Our evidence also indicates that debt at older ages can negatively influence retirement well-being.
Click here to see the working paper.
May 2019
We investigate teachers’ awareness of the importance of financial education, along with their motivation and confidence in teaching personal finance. We aim to identify strategies to advance school based financial education and further support educators. We survey a sample of teachers and non-teachers. Findings reveal that professional development is the factor that most motivates educators and enhances their confidence in teaching personal finance. Recommendations include that state and district-level policymakers take steps to broaden financial education opportunities in school by expanding training support to teachers across the nation.
May 2019
In today’s economy, individuals—sometimes at an early age—are required to make important and complex financial decisions, many of them with long-lasting consequences. In executing these decisions, people may tap into many resources, including ones online. For those aiming to expand Millennials’ engagement with online financial education resources, it is crucial to understand why, when, and how young people seek out information on personal finance. We launched a survey to understand what motivates Millennials’ engagement and influences them to build their levels of financial knowledge. We complement our results with those of two other surveys representative of the U.S. population, the National Financial Capability Study (NFCS) and the TIAA Institute-GFLEC Personal Finance Index (P-Fin Index). Millennials are aware of and use online financial education resources, however, those who do not engage with online resources said they do not do so because there is no immediate need, they have trouble finding helpful information, they fear the information would be too complicated, or they do not trust the information.
April 2019
The 2019 TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) represents the third wave of a long-term project to annually assess financial literacy among the U.S. adult population. The P-Fin Index is unique in its capacity to produce a robust measure of overall personal finance knowledge and a nuanced analysis of knowledge across eight areas of personal finance in which individuals routinely function.
April 2019
Abstract: Working past the general retirement age is becoming a must for many in the baby boomer cohort and the cohorts that follow, and flexible work arrangements such as phased retirement programs can help meet the needs of employers and employees considering alternatives to traditional retirement patterns. Employers offering phased retirement programs are improving their workforce-planning strategies and are able to overcome labor shortages, benefit from retaining expert knowledge, and help employees boost financial security after retirement and stay socially and cognitively engaged. We evaluated phased retirement programs and their adequacy for those working beyond the general retirement age. Our qualitative research—in-depth interviews with employers and retirement experts—offers insight and perspectives on the challenges and benefits that employers and employees face and ways to design formal programs that enable those who would like to work longer to gradually reduce their hours as they reach retirement.
September 2018
Abstract: Phased retirement offers many benefits to employees who wish to maintain a steady income stream later in life and to employers who want to retain their experienced workforce, yet few employers
offer formal programs as a variety of barriers hinder widespread implementation. These barriers include regulatory complexities and ambiguities involving federal tax and age discrimination laws. Thus, employers are tasked with overcoming significant barriers to facilitating a phased transition into retirement for their workers. In this report, we addresses the various challenges related to phased retirement from the employee, employer, and legal perspective. Further, we discuss employee interest in working past the traditional retirement age by using 2014 Health and Retirement Study (HRS) data.
September 2018
Summary: Using an oversample of Gen Y in the 2018 wave of the TIAA Institute-GFLEC Personal Finance Index (P-Fin Index), this report examines the financial literacy of millennials and how they engage with fin-tech, i.e., use smartphones for financial purposes.
May 2018
Summary: Youth today confront an economic climate that imposes individual financial responsibility at levels greater than in the past. The financial literacy assessment within the Programme for International Student Assessment (PISA) provides an international measure of students’ preparedness for the financial decisions they will face on a daily basis. This assessment was launched in 2012 with 18 participating countries and economies. The most recent wave, in 2015, covers 15 countries and provides an unprecedented opportunity to explore changes in and influences on the financial literacy of young people. The data reveal a persistent lack of financial literacy among 15-year-olds in most of the participating countries and economies. Italy is the only OECD country to show a marked improvement in financial literacy performance between the 2012 assessment and the 2015 wave. Many factors influence students’ financial skills and knowledge, among them financial access, family background, the support and participation of parents, and the educational environment of schools. Actions taken by parents, schools, and teachers can help improve the financial literacy of the student population in Italy, equipping the next generation with the knowledge and skills it needs to independently navigate the financial landscape toward a financially sound future.
April 2018
Summary: The consequences of poor financial capability at older ages are potentially serious, particularly when people make mistakes with credit, draw down retirement assets too quickly, or are defrauded by financial predators. Because older persons are close to or past the peak of their wealth accumulation, they are often the targets of fraud. This project evaluated older Americans’ exposure to fraud and financial exploitation, the risk factors associated with financial victimization, and the consequences of these vulnerabilities for financial security in old age.
We find that relatively few experienced any single form of investment fraud over the prior five years, but 8% did report at least one form of fraud. Moreover, one-third indicated that others had used or attempted to use one of the respondent’s accounts without permission. Nevertheless, we discovered few readily-identifiable factors associated with financial victimization in the older population.
April 2018
Summary: The consequences of poor financial capability at older ages are serious and include making mistakes with credit, drawing down retirement assets too quickly, and being defrauded by financial predators. Because older persons are close to or past the peak of their wealth accumulation, they are often the targets of fraud. Our project analyzes a module we developed and fielded in the 2016 Health and Retirement Study (HRS). Using this dataset, we evaluate the determinants of financial mismanagement and fraud, the incidence and risk factors for different types of financial fraud, and the consequences of financial mismanagement for older persons’ financial security. We find that relatively few HRS respondents experienced any single form of investment fraud over the prior five years, but 8% did report at least one form of fraud. Moreover, one-third of respondents indicated that others had used or attempted to use one of the respondent’s accounts without permission. Nevertheless, we found few readily identifiable factors associated with financial victimization in the older population.
April 2018
Summary: The TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) is an annual barometer of knowledge and understanding which enable sound financial decision making and effective management of personal finances among U.S. adults. It is unique in its capacity to examine financial literacy across eight areas of personal finance in which individuals routinely function. The 2018 data represents the second wave of the P-Fin Index.
October 2017
Summary: This report uses the inaugural wave of the TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) to examine financial literacy among Hispanics. A more refined understanding of Hispanic financial literacy could accelerate initiatives to improve their financial well-being.Personal finance knowledge among Hispanics is lower than that of the U.S. adult population as a whole. But beyond the gap with the general population, there is a notable difference in financial literacy within the Hispanic population between those born in the U.S. and those foreign born. The difference in the percentage of P-Fin Index questions answered correctly among U.S.-born Hispanics and foreign-born Hispanics (8 percentage points) is close to the difference between whites and U.S.-born Hispanics (11 percentage points).The difference in financial literacy between U.S.-born and foreign-born Hispanics cannot simply be attributed to differences in underlying demographics. Greater financial literacy among U.S.-born Hispanics relative to their foreign-born peers is consistent with education and income differences between the two groups. However, it is inconsistent with age differences between the two.
December 2017
Summary: Employers routinely attempt to address deficiencies in financial decision making among their employees by deploying educational interventions that are brief and laden with motivational rhetoric. The object of the rhetorical elements is to compensate for brevity by making the material engaging, memorable, and actionable. Prior studies of these interventions evaluate their benefits using criteria that suffer from serious conceptual and practical limitations. In contrast, our research employs a novel method for assessing the quality of decision making that respects each consumer’s underlying tastes and focuses instead on mistakes arising from misconceptions about opportunities. We deploy this method to evaluate a pair of educational interventions targeting two critical topics in personal finance: compound interest and portfolio allocation. Both interventions appear to be effective based on conventional outcome measures….
Global Thinking Foundation | July 2017
Summary: Financial literacy is a skill that is essential if one is to participate in today’s economy. Wide-ranging developments in the financial marketplace have contributed to growing concerns about the level of financial literacy of citizens of many countries. Through analysis of the S&P Global FinLit Survey, the most comprehensive global data set on financial literacy to date, we find that financial illiteracy is widespread, but it is particularly pronounced among women. Worldwide, just one in three adults show an understanding of basic financial concepts, making it clear that billions of people are unprepared to deal with rapid changes in the financial landscape…
Global Thinking Foundation | May 2017
Summary: Worldwide, just one in three adults show an understanding of basic financial concepts, making it clear that billions of people are unprepared to deal with rapid changes in the financial landscape. Credit products, many of which carry high interest rates and complex terms, are becoming more readily available. Governments are pushing to increase financial inclusion by boosting access to bank accounts and other financial services, but unless people have the necessary financial skills, these opportunities can easily lead to high debt, mortgage defaults, or insolvency. This is especially true for young people who suffer from low financial literacy…
March 2017
Summary: The following report provides a comprehensive analysis of the personal finances of working women. Using data from the National Financial Capability Study conducted in 2015, we examined the financial capability of working women and how it changed since 2012.
The study showed as the economy steadily recovered, working women’s personal finances also improved. In particular, working women now find it easier to make ends meet, and are using alternative financial services less often. Further, women are less likely to carry credit card debt or engage in expensive credit card behaviors. However, several subgroups—those who are early in their careers, those with children, and those who have experienced marital disruption—still show signs of financial distress. In 2015, financial fragility decreased among working women, but one-third still state they would not be able to cover an unexpected expense of $2,000 in a month’s time….
March 2017
Summary: 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. It is unique in its capacity to examine financial literacy across eight areas of personal finance in which individuals routinely function, as well as providing a robust indicator of overall personal finance knowledge and understanding. U.S. adults are split 50/50 between those who could and those who could not answer over one-half of the P-Fin Index questions correctly. Sixteen percent of Americans demonstrated a relatively high level of personal finance knowledge and understanding, i.e., they answered over 75% of the index questions correctly. Twenty percent have a relatively low level of knowledge and understanding, answering 25% or less of the questions correctly.
November 2016
Summary: The National Financial Capability Study (NFCS) is an ongoing study first conducted in 2009. It is commissioned and supported by the FINRA Investor Education Foundation, in consultation with the U.S. Department of the Treasury and the President’s Advisory Council on Financial Literacy. Its main objectives are the elicitation of key measures of financial capability among American adults, an assessment of how such measures evolve over time and with the business cycle and an evaluation of how they vary with demographic and attitudinal characteristics as well as with the level of financial literacy possessed by individuals….
This report provides a descriptive analysis of the financial capability of American adults based on a unique data set constructed by merging individual answers to the NFCS questionnaire with and extensive range of socio-economic status variables available, for each respondent, through other ALP surveys….
January 2017
Summary: In November 2016, Allianz, in collaboration with Director Annamaria Lusardi, surveyed a total of 10,000 (approximately 1,000 people in each country) in the western European countries of Austria, Belgium, France, Germany, Italy, the Netherlands, Portugal, Spain, Switzerland, and the United Kingdom to better understand their financial and risk literacy and financial decision making. The relationship between financial literacy and relevant financial outcomes (borrowing and investing behavior and planning and saving for retirement) is well documented in the academic literature. This current study goes further by adding questions relating to risk concepts. It also examines the extent to which people who have a good understanding of financial and risk concepts are also better at recognizing the right financial product for a specific financial need in real-life situations…
September 2016
Summary: Our research investigates whether and how older women’s current and anticipated future labor force patterns has changed over time, to evaluate the factors associated with longer work lives and plans to continue working at older ages. For our empirical investigation, we use data from two sources: the Health and Retirement Study (HRS), and the National Financial Capability Study (NFCS). Our analysis finds that older women’s current and intended future labor force attachment patterns have changed markedly over time. Compared to the HRS baseline cohort (first interviewed in 1992), recent cohorts of women in their 50’s and 60’s work more, and they are also more likely to say they will continue to be working at age 65….
July 2016
Summary: Financial capability is a multi-dimensional concept that encompasses a combination of knowledge, resources, access, and habits. The NFCS is designed to understand and measure a rich, connected set of perceptions, attitudes, experiences, and behaviors across a large, diverse sample in order to provide a comprehensive analysis. As with previous waves, the 2015 NFCS has been updated to include questions on additional topics that are relevant today, such as student loans and medical costs, while maintaining key measures to enable tracking comparisons over time.
The Gerontological Society of America | 2016
Summary: Many people envision a life of work that builds to comfortable and enjoyable retirement years. For previous generations, the financial security that marked that post–labor-force chapter hinged on how generous employers were with pensions or how well employers invested and managed retirement accounts. In recent years, however, fast-paced changes to workforce dynamics, a dramatic shift from employer-provided retirement accounts to worker-managed retirement plans, and lengthening life expectancies have altered that safety net, making retirement security much more challenging to achieve….
Standard & Poor's Ratings Services | November 2015
Summary: Given the many ways financial literacy affects financial behavior (Lusardi and Mitchell, 2014), it is important to understand the extent of people’s understanding of basic financial concepts as well as the degree to which financial skills fall short among groups like women and the poor. The Standard & Poor’s Ratings Services Global Financial Literacy Survey (S&P Global FinLit Survey) provides this information across a wide array of countries. It builds on early initiatives by the International Network on Financial Education (INFE) of the Organization for Economic Co-operation and Development (OECD), the World Bank’s Financial Capability and Household Surveys, the Financial Literacy around the World (FLAT World) project, and numerous national survey initiatives that collect information on financial literacy. The survey complements these efforts by delivering the first and most comprehensive global gauge of financial literacy to date.
TIAA-CREF Institute | May 2015
Summary: This report examines the personal finances—assets, liabilities, planning behaviors, financial vulnerability and financial literacy—of college-educated Hispanics, i.e., those with high school degrees who report at least “some college” as their highest level of educational attainment. Many college-educated Hispanics are, in various ways, in a tenuous financial state characterized by financial fragility and broad use of expensive credit card behaviors or alternative financial services. Moreover, their financial literacy is consistently low, despite high confidence about their decision-making abilities. These low levels of financial literacy are associated with the other financial challenges faced by college-educated Hispanics that are outlined in this report.
APEC | November 2014
Summary: This is a joint initiative, that means, it is based on the efforts, knowledge and wisdom of experts from all the APEC economies and at the same time it is hoped to benefit all the economies in the APEC region in the long run. By distilling lessons from the APEC region and sharing best practices, we hope to make a contribution to laying a solid foundation for employability and productivity of the workforce in economies in the APEC region through education in economic and financial literacy, especially for developing economies, in the changing economic circumstances.
Filene Research Institute | October 2014
Summary: This report shows how pre-retirees—those between 51 and 61 years of age—face a number of financial challenges. Authors Carlo de Bassa Scheresberg and Annamaria Lusardi use financial capability data from the 2012 National Financial Capability Study to highlight the troubling prevalence of long-term debt among individuals who are close to retirement. In addition, the data show that many pre-retirees use expensive credit card borrowing, lack both short-term and long-term financial management and planning, and use financial advice only sparingly
TIAA-CREF Institute | May 2014
Summary: This study increases our understanding of the unique financial needs of working women by examining key factors associated with their personal finances and identifying issues that are critical to their financial future. The study provides an overview of working women’s financial capability and documents how personal financial needs and financial behaviors vary by family status and career stage. The study concludes with a list of actions that would help to better serve working women’s financial needs.
Filene Research Institute | May 2014
Summary: Generation Y will leave a lasting imprint on American history. The largest, most diverse generation America has seen, Generation Y comprises millions who were born between the late 1970s and the mid-1990s. While this generation is confident, they face financial pressures that will jeopardize and limit their economic opportunities. A fragile economy, student debt, and an unstable job market are a few of the hurdles they face. Looking at the data from the most recent National Financial Capability Study (NFCS), we are concerned about their unprecedented levels of student debt and their overconfidence in financial matters. Despite encouraging signs in terms of their assets, the analysis reveals that Millennials are deeply indebted and struggle to meet payments on both short- and long-term obligations. Even though most Gen Yers feel good about their financial knowledge, data show that they lack the basic skills needed to make savvy financial decisions.
TIAA-CREF Institute | February 2014
Summary: This study has used new data from the NFCS to analyze salient issues related to college-educated Millennials’ financial capability, practices, and status, and in the process identify key financial challenges they face. The results suggest that the promotion of financial literacy—through financial education—is needed. In particular, there is a need for improved knowledge and understanding regarding debt and debt management. Policies aimed at improving financial literacy could help Gen Y minimize the costs incurred in managing debt, improve personal financial safety nets, and fortify both short-term and long-term financial stability and security. The gap between the financial responsibilities of Gen Y and their ability to manage financial decisions and take advantage of financial opportunities has both individual and societal implications if it remains unaddressed.
OECD | October 31, 2013
Summary: This document collects the contributions of the four main speakers of the OECD/INFE/GFLEC Global Policy Research Symposium to Advance Financial Literacy, held in Paris on 31 October 2013. The conference was co-organised with the Global Financial Literacy Excellence Center (GFLEC) at the George Washington School of Business, Washington, DC. These proceedings benefited from the support of VISA Europe.
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