Financial Literacy and Wellness among African-Americans: Demographic variations among African-Americans

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

Financial literacy varies across demographic groups among African-Americans (Figure 4). 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.10

  • Financial literacy is significantly higher among men. There is a seven percentage point difference between African-American men and women in the percentage of index questions answered correctly. This gender differential holds even after accounting for other socio-economic factors, such as education, marital status and income.

  • Personal finance knowledge tends to increase with age. One-third of index questions are answered correctly on average among African-Americans under age 45, compared to 43% among those ages 45 and older.

  • Personal finance knowledge tends to be greater among those with higher household incomes. There is a 29 percentage point difference in P-Fin Index questions answered correctly between African-Americans with household incomes below $25,000 and those with household incomes of $100,000 or more.

  • Financial literacy varies with employment status. In particular, unemployed or disabled11 African-Americans have markedly less personal finance knowledge than those employed12 and those retired.

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Source: TIAA Institute-GFLEC Personal Finance Index (2019).

Variations by education

In the U.S. adult population, financial literacy tends to be greater among those with more education and those who have received financial education.13 The same holds among African-Americans (Figure 5).

  • College-educated African-Americans answered 53% of the P-Fin Index questions correctly on average, compared with 24% among those with less than a high school degree.

  • There is a 11 percentage point difference in the percentage of index questions answered correctly between African-Americans who have participated in a financial education class or program and those who have not done so.14

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Source: TIAA Institute-GFLEC Personal Finance Index (2019).

10 See Yakoboski, Lusardi and Hasler (2019).
11 Includes those unemployed or on temporary layoff, as well as those disabled and unable to work.
12 Includes those employed full-time, part-time and self-employed.
13 See Yakoboski, Lusardi and Hasler (2019).
14 See Lusardi and Mitchell (2014) for a discussion of existing research regarding the relationship between financial education programs and financial literacy levels, as well as the challenges inherent in empirically establishing causality and effectiveness.