Financial literacy and wellness among U.S. women: Women’s financial literacy

Financial literacy is disturbingly low among U.S. adults in general, including women. On average, female adults correctly answered 49% of the 2020 P-Fin Index questions. Forty-eight percent correctly answered over one-half of the index questions, with 12% demonstrating a relatively high level of financial literacy, i.e., they answered over 75% correctly (Figure 1).

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

The P-Fin Index gauges personal finance knowledge and understanding in eight functional areas7:

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.

Comprehending risk and uncertainty is the area of lowest financial literacy among women. Comprehending risk and uncertainty involves, for example, understanding that the expected outcome in a given scenario depends on the range of possible outcomes, the financial implication associated with each outcome, and the likelihood of each outcome occurring. On average, women correctly answered 34% of these questions (Figure 2).

2020 P-Fin Index Figure #2
Source: TIAA Institute-GFLEC Personal Finance Index (2020).

Risk and uncertainty are inherent across the realms of personal finance, not just investments. The ultimate outcomes from a given decision are often unknown when making the decision. An individual’s financial situation can change unexpectedly, in particular, in terms of employment and income, as seen during the ongoing crisis. Therefore, understanding risk and its implications are important for sound financial decision making.

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, unfortunately 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, with 61% of these questions answered correctly, on average. 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.

Apart from debt, only up to approximately one-half of the questions in the other functional areas are answered correctly, revealing a low level of knowledge in important areas of financial decision making.

7 These areas correspond to the National Standards for Financial Literacy outlined by the Council for Economic Education. See

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