Financial literacy and wellness among U.S. women: Insights on underrepresented minority women 

November 2020
Summary

Many Americans are functioning in today’s environment with a poor level of financial literacy. This is more true among women than men, and more true among underrepresented minority women than their white peers. Especially problematic in today’s environment is the finding that financial literacy is particularly low in the area of comprehending and understanding risk and uncertainty. On average, U.S. women correctly answered only one-third of the index questions related to risk and uncertainty. The same holds true among African American and Hispanic women. This means that individuals are ill-positioned to make decisions in a time when uncertainty and volatility dominate economic and financial life.

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Key Insights
On average, women correctly answered 49% of the 2020 P-Fin Index questions.
Comprehending risk and uncertainty is the area of lowest financial literacy among women. Borrowing and debt management is their area of greatest personal finance knowledge.
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.
Greater financial literacy is associated with greater financial wellness among underrepresented minority women.
Methodology

This report uses data from the 2020 TIAA Institute-GFLEC Personal Finance Index, an online survey fielded each January with a sample of U.S. adults. The 2020 survey included an oversample of 1,000 women.

Low financial literacy, especially with regards to risk and uncertainty, means that women are particularly ill-positioned to make appropriate financial decisions in the pandemic environment.
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Authors

About TIAA Institute

The TIAA Institute helps advance the ways individuals and institutions plan for financial security and organizational effectiveness. The Institute conducts in depth research, provides access to a network of thought leaders, and enables those it serves to anticipate trends, plan future strategies and maximize opportunities for success.
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