Financial Literacy and Wellness among African-Americans

New Insights from the Personal Finance (P-Fin) Index 


This report uses the third wave of the TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) to examine the current state of financial literacy and financial wellness among African-American adults.


Financial literacy is knowledge and understanding that enable sound financial decision making and effective management of personal finances. A more refined understanding of financial literacy among African-Americans, including areas of strength and weakness and variations among subgroups, can inform initiatives to improve financial well-being. There is a strong link between financial literacy and financial wellness among African-Americans.

Key Insights

  • On average, African-Americans answered 38% of the P-Fin Index questions correctly.

  • Insuring is the functional area where personal finance knowledge is lowest among African-Americans.

  • Borrowing and debt management is the area of highest personal finance knowledge among African-Americans.

  • Personal finance knowledge among African-American adults lags that of whites. On average, whites answered 55% of the P-Fin Index questions correctly.

  • There is a strong link between financial literacy and financial wellness among African-Americans. Those who are more financially literate are more likely to plan and save for retirement, to have non-retirement savings, and to better manage their debt; they are also less likely to be financially fragile.


The P-Fin Index is an online survey fielded each January with a sample of U.S. adults; the 2019 sample consisted of 1,008 individuals. At each administration of the survey, a particular demographic group is oversampled to enable more detailed analysis. In 2019, 1,015 African-American adults were oversampled. 

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Executive Summary

The nation’s 44 million African-Americans account for 13% of the U.S. population and have a significant impact on the economy, with $1.2 trillion in purchases annually. Yet the financial well-being of African-Americans lags that of the U.S. population as a whole, and whites in particular. The reasons for these gaps are complex, but one area of importance in addressing them is increased financial literacy.

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The nation’s 44 million African-Americans account for 13% of the U.S. population. Their economic impact is significant with $1.2 trillion in purchases annually, representing more than one-third of spending in several product categories.

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African-American financial literacy

Financial literacy is low among many U.S. adults, including African-Americans. On average, African-American adults answered 38% of the P-Fin Index questions correctly. Only 28% answered over one-half of index questions correctly, with 5% answering over 75% correctly.

Read more about African-American financial literacy 


Demographic variations among African-Americans

Financial literacy varies across demographic groups among African-Americans. Observed variations in the average percentage of P-Fin Index questions answered correctly are consistent with those identified among the U.S. adult population as a whole.

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Personal finance functional knowledge

The P-Fin Index gauges personal finance knowledge and understanding in eight functional areas.

1. Earning—determinants of wages and take-home pay.
2. Consuming—budgets and managing spending.
3. Saving—factors that maximize accumulations.
4. Investing—investment types, risk and return.
5. Borrowing and managing debt—relationship between loan features and repayments.
6. Insuring—types of coverage and how insurance works.
7. Comprehending risk and uncertainty—understanding uncertain financial outcomes.
8. Go-to information sources—recognizing appropriate sources and advice.

Read more about Personal finance functional knowlegde


A closer look at the race gap

The financial literacy gap between African-Americans and whites can be partially, but not completely, attributed to underlying demographic differences between the two groups. Financial literacy is consistently correlated with various demographics in the adult population as a whole. In general, financial literacy is lower among females, younger individuals, those with less formal education and those with lower income.

Read more about the race gap


Financial wellness

The 2019 P-Fin Index survey contained several questions indicative of financial wellness—questions regarding behaviors that should promote financial wellness or regarding outcomes that demonstrate financial wellness. Our previous research found a strong link between P-Fin Index scores and these indicators of financial wellness.

Read more about financial wellness


Mobile pay

One example of fin-tech use was included in the 2019 P-Fin Index survey, given the rising importance of this topic and the potential impact on financial well-being. African-Americans are more likely than whites to pay for products and services by waving or tapping a smartphone at the point of purchase. 

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Financial wellness depends in part on how well individuals navigate the myriad of financial decisions faced in the normal course of life. Financial literacy is knowledge and understanding that enable sound financial decision-making and effective management of personal finances. As such, financial literacy contributes to financial well-being.

Unfortunately, financial literacy among U.S. adults is modest at best. Financial literacy among African-Americans is even lower. Furthermore, African-American financial literacy is lower than that of whites in all but one functional knowledge area. African-American financial literacy tends to be lowest in the areas of insuring, comprehending risk and uncertainty, investing and go-to information sources.

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