The 2020 TIAA Institute-GFLEC Personal Finance Index: Overall Financial Literacy

Many Americans lack personal finance knowledge that enables sound financial decision making. On average, U.S. adults answered 52% of the P-Fin Index questions correctly in 2020. In addition, there is close to a 50/50 split between those who correctly answered over one-half of the index questions (53%) and those who correctly answered one-half or less (47%) (Figure 1). Twenty percent demonstrated a relatively high level of financial literacy, i.e., they correctly answered more than 75% of the index questions, while 17% showed a relatively low level, i.e., they correctly answered 25% or fewer of the questions.

Figure 1
Source: TIAA Institute-GFLEC Personal Finance Index (2020).

The percentage of P-Fin Index questions answered correctly has increased 1 percentage point each year since the initial survey in 2017, rising from 49% to 52% (Figure 2).6 At the same time, the percentage of adults correctly answering more than one-half of the index questions increased from 48% in 2017 to 53% in 2020 and the percentage correctly answering more than 75% of the index questions rose from 16% to 20% (Figure 3). These changes from 2017 to 2020 are statistically significant, hinting at a slow increase in financial literacy levels.7

Figure 2
Source: TIAA Institute-GFLEC Personal Finance Index (2017-2020).
Figure 3
Source: TIAA Institute-GFLEC Personal Finance Index (2017- 2020).

Data for the 2017 index were collected in September 2016. Data collection for the 2018-2020 indices occurred with survey fielding in January of the respective year; future waves will follow this timing.

Other surveys, such as the National Financial Capability Study, indicate that financial literacy has decreased over time. Note, however, that the P-Fin Index uses a different and much larger set of questions and concepts to measure financial literacy.

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