Financial literacy and wellness among U.S. women: Executive summary

The TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) provides an annual measure of overall financial literacy among the U.S. adult population, plus a nuanced analysis of personal finance knowledge across eight functional areas. The 2020 P-Fin Index survey was fielded in January 2020 and included an oversample of women. This enables examining the state of financial literacy and financial wellness among U.S. women immediately before the onset of COVID-19. A more refined understanding of financial literacy among women, including areas of strength and weakness and variations among subgroups, can inform initiatives to improve financial wellness, particularly as the United States moves forward from the pandemic and its economic consequences.

Key findings for 2020 include:

  • Financial literacy is low among U.S. adults in general, including women. On average, female adults correctly answered 49% of the 2020 P-Fin Index questions.

  • Comprehending risk and uncertainty is the area of lowest financial literacy among women. Unfortunately, the COVID-19 pandemic has greatly amplified the degree of risk and uncertainty in the economy along multiple dimensions, such as employment, earnings, investment returns, and expenses. Low financial literacy, especially with regards to risk and uncertainty, means that individuals are particularly ill-positioned to make appropriate financial decisions in this environment.

  • Borrowing and debt management is the area of greatest personal finance knowledge among women. Debt tends to be a feature of personal finance common across the lifecycle for many individuals; knowledge and understanding may emerge from confronting accumulated debt, often from the early stages of adulthood.

  • Personal finance knowledge tends to be lower among underrepresented minority women—African American and Hispanic women—compared with their white peers. The former correctly answered 38% of the index questions, on average, and the latter 54%.

  • Financial literacy is notably lower among underrepresented minority women compared with their white peers in seven of the eight functional areas. Comprehending risk is the lone area where functional knowledge is equal across the two groups; nonetheless, it is a relative weakness for both. The area of lowest financial literacy among underrepresented minority women—insuring—is also the area with the biggest gap. Comprehending risk and understanding insuring are particularly important during a crisis with tremendous health and economic consequences like the current one.

  • The P-Fin Index survey contains several indicators of financial wellness and each shows a significant gap between underrepresented minority women and their white peers. With that said, greater financial literacy is associated with greater financial wellness among underrepresented minority women. African American and Hispanic women who correctly answered over 50% of the index questions are more likely to engage in behaviors connected to higher financial well-being compared to underrepresented minority women who correctly answered 50% or less of the questions.

Any opinions expressed herein are those of the authors, and do not necessarily represent the views of TIAA, the TIAA Institute or any other organization with which the authors are affiliated.

Back to main page