Americans lacking in financial literacy struggle to pay bills and achieve financial goals.

3 minute read

April is National Financial Literacy Month but a new survey doesn’t find much cause for celebration for a significant chunk of the U.S. adult population.

Many Americans have a poor level of financial literacy, according to an April 2022 survey and report on financial literacy from the TIAA Institute and the George Washington University School of Business and Global Financial Literacy Excellence Center (GFLEC).

The term financial literacy refers to the skills, knowledge and tools people use to manage finances, achieve financial goals and make financial decisions, the crucial elements of financial stability and financial well-being. Without good financial literacy, you’re likely missing out on financial well-being, an important factor in overall well-being.

The report’s findings are based on the TIAA Institute-GFLEC Personal Finance Index (P-Fin Index), a project that began in 2017 to gauge financial literacy among U.S. residents ages 18 and older. Respondents to the P-Fin Index answered numerous questions on a variety of topics to indicate a person’s financial well-being, including:

  • Borrowing
  • Saving
  • Consumer purchases
  • Financial information sources
  • Earning
  • Investing
  • Insurance
  • Comprehending risk

“On average, U.S. adults correctly answered only 50 percent of the index questions in 2022,” according to the report. “Eighteen percent correctly answered over 75 percent of the index questions, while 23 percent correctly answered 25 percent or fewer of the questions.”

So, which Americans struggle most with financial literacy? Below are additional findings from the TIAA-GFLEC report.

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Men score higher than women

Men answered 55 percent of the P-Fin Index financial questions correctly, compared to women, who provided correct answers on 45 percent of the questions.

Find out: 6 Signs You Need to Improve Your Financial Literacy

College graduates rank highest

People with college degrees answered 65 percent of P-Fin Index questions correctly, followed by respondents with some college (49 percent), those with only a high school degree (38 percent) and people with less than a high school degree (31 percent).

Find out: Florida Is Now the Largest State to Make High Schoolers Learn About Money

Higher income = greater financial literacy

People with a higher household income scored higher on correct answers to the 2022 P-Fin Index questions

  • $100,000 or more (60 percent)
  • $50,000 to $99,000 (51 percent)
  • $25,000 to $49,000 (38 percent)
  • Less than $25,000 (30 percent)

Comprehending risk a financial sore spot for many

Financial literacy is lowest among Americans in the category of comprehending risk.

On average, only 36 percent of respondents answered P-Fin Index questions on understanding uncertain financial outcomes, financial implications of different outcomes and how likely certain outcomes are to occur correctly.

Financial literacy varies among demographic groups

Asian Americans (54 percent) and Caucasians (55 percent) scored almost equally with correct answers on the P-Fin Index. “Approximately one-quarter of Asian Americans and whites have very high levels of financial literacy,” according to the report.

Black and Hispanic Americans also scored fairly equally, with black respondents answering 37 percent of the index questions correctly and Hispanic respondents providing correct answers to 38 percent of financial literacy questions. Differences in financial literacy across race and ethnicity don’t reflect inherent differences in capability, however.

“There are demographic differences a level down across groups that matter, such as age, education and income distributions,” says the report. “Beyond that, other dynamics which data do not capture are in play, including systemic factors and issues.”

Millennials struggle most with financial well-being

According to the TIAA Institute-GFLEC report, Gen Y (millennial) respondents, born between 1981 and 1996, struggle more with most areas of financial well-being than other age groups. Around 65 percent of Gen Yers who answered less than 50 percent of P-Fin Index questions correctly said they don’t have even one month of non-retirement savings to cover expenses.

Roughly 44 percent from that same correct-answer percentage said they find it difficult to make ends meet each month, and 37 percent said they’re unable to address other financial priorities due to debt payments.

To view the complete report, visit the TIAA Institute.

How to increase your financial literacy

If you feel like you’d score low on the financial literacy scale, don’t give up. There are plenty of free resources out there to help you learn to manage finances, save money for financial goals and educate yourself on investing, credit cards, loans and other financial topics.

You can beef up on financial literacy by listening to personal finance podcasts and reading information articles on budgeting, credit and other topics on personal finance sites. Many nonprofit credit counseling agencies also offer free or nominal-fee credit counseling, help creating a budget and debt repayment plan, homebuyer or bankruptcy courses.

For more ways to improve financial literacy, browse MyMoney.gov from the Federal Financial Literacy and Education Commission, Investor.gov from the U.S. Securities and Exchange Commission and the Consumer Financial Protection Bureau.

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About the Author

Deb Hipp

Deb Hipp

Deb Hipp is a full-time freelance writer based in Kansas City, Mo. Deb went from being unable to get approved for a credit card or loan 20 years ago to having excellent credit today and becoming a homeowner. Deb learned her lessons about money the hard way. Now she wants to share them to help you pay down debt, fix your credit and quit being broke all the time. Deb's personal finance and credit articles have been published at Credit Karma and The Huffington Post.

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