The Personal Finance Index: Variations By Education

Personal finance knowledge is positively correlated with both general education and financial education in the P-Fin Index, a finding consistent with previous research. Figure 5 shows the percentage of index questions answered correctly across general education levels, and by the receipt/non-receipt of financial education. Figure 6 presents the distribution of correct answers across the same groups.

The share of P-Fin Index questions answered correctly is successively greater for higher levels of education. Those with a college degree are most likely to have a relatively high level of personal finance knowledge and understanding; those with less than a high school degree are most likely to have a relatively low level.

Individuals who have participated in a financial education class or program—provided in high school or college, in the workplace, or by a community organization—answered more questions correctly than those who have not received financial education. They are more likely to have a relatively high level of personal finance knowledge and less likely to have a relatively low level.

“Do not know” responses

Analysis of DNK responses is valuable, as previous research has demonstrated that a DNK response provides additional information. Figure 7 shows the percentage of DNK responses to the P-Fin Index questions across demographic groups, including general and financial education. This reveals patterns in personal finance knowledge analogous to those discussed above, specifically:

  • There is only a marginal difference between men and women in the percentage of questions answered DNK.

  • DNK responses are more common among young adults, i.e., those under age 45.

  • The frequency of DNK responses decreases as household income levels rise.

  • DNK responses are much more common among individuals who are not employed.

  • The frequency of DNK responses decreases as educational attainment increases.

  • DNK responses are more common among those who have not received financial education.

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P-Fin Index figure 5
P-Fin Index figure 6
P-Fin Index figure 7