Financial Literacy Remains a Challenge for Many Americans

A recent study from the TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) suggests that financial literacy remains a challenge for many Americans.

For the past ten years, researchers have tracked financial knowledge using the Personal Finance Index (P-Fin Index), which measures understanding across a variety of everyday financial topics. The results have remained surprisingly consistent: on average, Americans answer only about half of the questions correctly.

In 2026, participants correctly answered 47% of the questions, continuing a long-term trend of relatively low financial literacy. In fact, the average score has never exceeded 52% during the ten years the survey has been conducted.

Researchers also noted signs that financial knowledge may be declining. The percentage of adults with very low financial literacy increased in 2026, and knowledge fell across several key financial topics.

One area stood out in particular: understanding risk. Participants correctly answered only 36% of the questions related to risk, making it the weakest area measured by the study. This finding is noteworthy because many financial decisions, including investing, insurance, and retirement planning, involve evaluating risk.

The study also found differences among demographic groups. Women scored lower than men on average, and Gen Z had the lowest overall financial literacy among the generations surveyed. Gen Z participants answered only 38% of the questions correctly on average.

Researchers found a strong relationship between financial literacy and overall financial well-being. Individuals with lower financial literacy were more likely to struggle with day-to-day finances, have insufficient savings, carry burdensome debt, and experience financial stress.

The survey also explored the use of artificial intelligence for personal finance. While nearly one in five adults reported using AI tools to obtain financial information, only a small percentage use AI regularly to help manage their finances.

The findings highlight an ongoing challenge. As financial decisions become increasingly complex, many Americans continue to lack the knowledge needed to confidently navigate topics such as investing, retirement planning, insurance, and debt management.

While no single study can capture every aspect of financial knowledge, the results suggest that access to clear, practical financial education remains as important as ever.

Source: https://gflec.org/initiatives/personal-finance-index/