Financial Literacy Slips While Affordability Woes Increase

Two newly released surveys paint a troubling picture: Americans know less about personal finance just as worries about everyday affordability continue to rise. 

A report from retirement and investment firm TIAA shows “Financial Literacy in America Has Declined to Its Lowest Level in a Decade.” The research is released on the heels of a Gallup poll that finds “Affordability Still Dominates Americans’ Financial Worries.” 

Debt.com has reported extensively on affordability fears, financial anxiety and depression. The mental impact is real. But help is, too. Before looking at possible solutions, here's what the latest research shows. 

Declining financial literacy

Researchers at TIAA and Stanford university's Global Financial Literacy Excellence Center tested Americans' knowledge with a 28-question financial literacy survey. The average score was just 47%, the lowest since the survey began in 2017. They saw a decline across every generation, income level, education level, and gender. 

Borrowing remains one of the strongest areas for consumers, but even that category showed signs of slipping. Previous Debt.com reporting shows limited financial literacy can contribute to higher borrowing costs, missed opportunities to save, and greater vulnerability.

"Financial literacy is an essential life skill, like reading and writing," says Annamaria Lusardi, an economist from Stanford University and Academic Director of GFLEC. "A decade of data shows we are not where we need to be, and this year's results make the urgency impossible to ignore."

Rising affordability stress

Gallup's latest Economy and Personal Finance survey found that affordability remains the nation's top financial concern. Nearly one in three Americans (29%) cited not having enough money to pay for the things they need or want as their biggest financial worry, making it the leading concern for the third consecutive year.

Inflation has slowed, but many households still struggle with higher prices. Grocery bills, housing costs, insurance premiums, and other everyday expenses still strain budgets.

The survey also found growing concern about the economy more broadly, with Americans increasingly worried about maintaining their standard of living and keeping up with rising costs.

When stress affects financial decisions

Debt.com has previously reported on how prolonged financial stress can make budgeting and long-term planning more difficult. When people are overwhelmed by immediate financial pressures, they often focus on today's bills instead of tomorrow's financial health.

Financial stress and poor financial decisions can reinforce one another. Debt can create more stress, while stress can make it harder to plan ahead and make sound financial choices. 

Debt.com has called this phenomenon "Stressflation," the emotional toll that prolonged financial pressure takes on consumers. While inflation may eventually cool, the psychological effects can linger much longer.

Break the cycle

The encouraging news is that financial literacy is a skill people can build over time. 

Whether someone is struggling with credit card debt, trying to build a budget, or simply looking to better understand their finances, education remains one of the most effective tools available. 

Nonprofit credit counseling agencies, financial education programs, and reputable online resources can help consumers better understand their options before financial problems become crises.

Need help finding reputable resources? Call Debt.com (844) 402-3889. One of our specialists will connect you with the help you need.