Americans’ financial literacy is dangerously low amid a whirlwind of rising costs and economic uncertainty.
Some 51 percent of U.S. adults failed to answer a series of basic personal finance questions correctly in a survey conducted by the financial services company TIAA.
The questions, which assess financial literacy based on eight factors, reveal that the average person’s understanding of financial concepts is up 1 percentage point since 2024 but remains the same as it was when the study started in 2017.
“Many individuals function with a poor level of financial literacy, which can diminish their financial well-being,” the study said. “Financial literacy in the U.S. is stagnant at the generally low levels that existed eight years ago.”
In the nine years that TIAA has done the study, financial literacy has exceeded 50 percent only twice: 2019 and 2020.
Respondents showed growth in only two areas of the study - saving (53 percent to 56 percent) and go-to info sources (47 percent to 48 percent).
Certain demographics struggled more than others. The lowest scores were found among women, Black Americans, Hispanic Americans and Gen Z, the study said.
The country’s lack of collective financial understanding can seriously impact consumers’ finances, the study said.
“Individuals with greater financial literacy tend to have better personal finance outcomes compared with those with lesser financial literacy,” the study said.
Those “better financial outcomes” are estimated at $245 billion, according to a December survey from the National Financial Educators Council. Some 14.6 percent of respondents said they believe their lack of financial savvy cost them more than $2,500 in 2025.
“Financial illiteracy has become an epidemic in this country,” council CEO Vince Shorb said in a statement. “We need to start teaching comprehensive financial education to children early in life, so that all Americans have the knowledge they need to make the financial decisions they'll face in the changing economic world.”
Resolving the country’s failing financial literacy requires a three-fold solution that focuses on education, TIAA said, particularly among younger consumers.
“It’s important to equip young people with the knowledge necessary to make the many financial decisions they’ll face in life,” the study said. “One way is to promote financial education in primary and secondary education.”
Programs and initiatives designed specifically for populations with the lowest literacy scores are critical, too, TIAA noted.
Attention must be paid to the average person’s ability to comprehend risk, the study said. Risk involves many areas of finance, including saving, investing and insurance.
“Improved functional knowledge in this realm could have significant financial benefits for many,” the study said.
