The 2020 TIAA Institute-GFLEC Personal Finance Index: Self-perceptions

Many individuals do not know what they do know in terms of financial literacy. Consuming and earning are the areas where the largest share of adults rate their financial knowledge as being highest (25% and 22%, respectively) (Figure 6). While these are areas of relative strength in terms of financial literacy (Figure 4), clearly many individuals do not recognize the level of knowledge they possess regarding borrowing. While borrowing is the area of greatest functional knowledge among U.S. adults, only 10% rate themselves most knowledgeable in this area, the same percentage that rate themselves least knowledgeable. Perhaps challenges individuals face in managing debt are viewed as signaling a lack of knowledge.

At the same time, many do not know what they do not know! Investing is by far the area where the largest share (30%) think they know the least; however, about one-half of the P-Fin Index questions on investment were answered correctly. On the other hand, only 13% think comprehending risk is the area where they know the least, when it is actually the area where people show the lowest functional knowledge. It appears that individuals tend to not recognize their more prevalent weakness.

Figure 6
Source: TIAA Institute-GFLEC Personal Finance Index (2020).