The TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) provides a barometer of U.S. adults’ readiness to make sound financial decisions. It examines financial literacy across eight common financial activities: earning, consuming, saving, investing, borrowing, insuring, understanding risk, and gathering information.
Financial Literacy and Wellness among African-Americans: New Insights from the Personal Finance (P-Fin) Index reports that African Americans answered 38% of the Personal Finance (P-Fin) Index questions correctly compared with 55% among whites, indicating a significant financial literacy gap.
“African Americans make up 13% of the U.S. population and constitute a critical segment of our economy. Yet financial literacy gaps exist across this demographic group regardless of gender, age, income level, or degree of education,” said Stephanie Bell-Rose, Head of the TIAA Institute in a press release. “It is imperative that we continue to shed light on this challenge in order to better map a course for financial success.”
“Our research finds that African Americans tend to exhibit lower financial well-being than the U.S. white population. Given the strong link between financial literacy and financial well-being, increased financial knowledge can lead to improved financial capability and behaviors,” said Annamaria Lusardi, Academic Director of GFLEC and Denit Trust Endowed Chair of Economics and Accountancy at GWSB. “Increasing efforts to promote research-based financial education in school and the workplace is one key solution for promoting financial well-being among African Americans.”
“This important research and data set underscore the centrality of financial decision making in modern America,” said Cy Richardson, senior vice president for programs at the National Urban League. “The convergence of financial, credit, and debt management provides headwinds for us all—yet structurally speaking the African American community has little margin for error compared to other groups and must continue to demonstrate progress on the critical measures and knowledge that is necessary to make financially responsible decisions—decisions, that are integral to our everyday lives and existence.”
You can view the full report on the TIAA Institute website.