Most Americans Lack the Knowledge to Be Financially Fit Per Annual TIAA Institute-GFLEC Personal Finance Index
Large numbers of Americans do not have the knowledge associated with financial decisions, according to an annual survey released today by the
The 2018 TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) reveals that financial literacy is the lowest in the area of comprehending risk with only 35 percent of questions on risk answered correctly, on average. Given that risk and uncertainty are inherent in most financial decision-making, low knowledge levels on this topic carry implications for Americans' overall financial well-being.
Compared to the 2017 findings, personal finance knowledge remains strong on the topics of borrowing and debt management with 60 percent of those questions answered correctly. For many individuals, knowledge and understanding of debt-related topics may emerge from confronting accumulated debt across the life cycle, often from a young age because of student loans.
"The annual P-Fin Index provides a deep understanding of the state of financial literacy among
"Less than one in five
The P-Fin Index found that financial literacy is significantly higher among men than women; with a share of 21 percent of men answering 75 percent of the P-Fin Index questions correctly compared to a share of 12 percent among women.
Additionally, individuals who have participated in a financial education class or program answered more P-Fin questions correctly on average than those who have not received financial education. This positive correlation shows the importance of financial education in schools and the workplace.
The P-Fin Index is unique in its capacity to robustly measure an individual's overall personal finance knowledge. The survey-based assessment tool asks 28 questions, covering eight areas of functional knowledge:
* Earning - determinants of wages and take-home pay
* Consuming - budgets and managing spending
* Saving - factors that maximize accumulations
* Investing - investment types; risk and return
* Borrowing/managing debt - relationship between loan features and repayments
* Insuring - types of coverage and how insurance works
* Comprehending risk - understanding uncertain financial outcomes
* Go-to information sources - recognizing appropriate sources and advice
The report was authored by
Barbican Launches Barbican Cyber ‘One-Step-Ahead’ Resilience Product
Philadelphia Attorney Jennifer McHugh to Receive Norton Award at PBA Commission on Women in the Profession 25th Annual Conference in Hershey
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News