The 2019 TIAA Institute-GFLEC Personal Finance Index: Demographics

Financial Literacy in the United States and Its Link to Financial Wellness

Demographic variations

Financial literacy varies across demographic groups. Figure 6 shows the average percentage of P-Fin Index questions answered correctly by demographics. These findings are overall consistent with variations identified in previous studies, including previous waves of the P-Fin Index.

  • There is a nine percentage point difference between men and women in P-Fin Index questions answered correctly.
  • Personal finance knowledge tends to increase with age. Forty-five percent of index questions are answered correctly on average among those ages 18 to 29, compared with 56% among those ages 60 and older.
  • Personal finance knowledge tends to increase as household income increases. The gap between those with household incomes below $25,000 and those with household incomes of $100,000 or more is 27 percentage points.
  • Financial literacy varies with employment status. In particular, those unemployed or disabled10 have markedly less personal finance knowledge than those employed11 and those retired.
P-Fin Index Figure #6

Figure 7 shows the percentage change in P-Fin Index questions answered correctly between 2017 and 2019. Again, the time period is short. In addition, sample size decreases as the sample of all adults is divided into subgroups, resulting in increased variance in the estimates. With those caveats, financial literacy levels are increasing among men, those in the 30-44 age group, and among those with household incomes of at least $100,000.13 While these are encouraging findings, it appears that any increases in financial literacy have been concentrated mostly among those with relatively high levels of literacy already.

 

P-Fin Index Figure #7