23% of Adults Got Most Financial Literacy Questions Wrong

Think You Know Money? 23% of Adults Got Most Financial Literacy Questions Wrong-Test Yourself!

Patrick Villanova, CEPF®  Sun, August 25, 2024

Despite the vast depth of information and education available today, financial literacy isn’t improving among adults in the U.S. A financial advisor can help you improve your financial literacy to better understand your money.

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On average, American adults correctly answered only 50% of the questions in the 2022 Personal Finance Index, an annual survey conducted by the TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) at the George Washington University School of Business.

Since researchers from the TIAA and George Washington University started gauging financial literacy among adults in 2017, functional knowledge hasn’t improved. The area where people struggle the most? Understanding financial risk. Here’s a look at the survey’s findings and some of the questions that were asked.

Financial Literacy Isn’t Improving

An annual survey conducted by TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) at the George Washington University School of Business found that adults could correctly answer only one-half of the questions, on average, a troubling figure that has remained stagnant over time.

An annual survey conducted by TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) at the George Washington University School of Business found that adults could correctly answer only one-half of the questions, on average, a troubling figure that has remained stagnant over time.

Unfortunately, this year’s survey and previous studies have revealed that many adults in the U.S. function with a poor understanding of financial topics. On average, U.S. adults answered only 50% of the index questions correctly in 2022, a figure that has remained steady since 2017.

While only 18% of respondents could correctly answer between 76% and 100% of the 28 questions that were posed in this year’s survey, nearly a quarter of adults (23%) incorrectly answered at least 75% of questions. What’s worse, the percentage of adults with poor financial literacy is on the rise. In 2020, only 17% of respondents got three-quarters of the questions wrong.

Assessing financial risk is the one area where functional knowledge is consistently lowest among U.S. adults, the survey found. Only 36% of questions related to risk were answered correctly, a 3% drop from the first survey in 2017.

“Comprehending risk involves, for example, understanding that the expected outcome in a given scenario depends on the range of possible outcomes, the financial implication associated with each outcome and the likelihood of each outcome occurring,” according to the study.

Which financial topic are American adults most knowledgeable about? Borrowing money. On average, 60% of questions related to borrowing were answered correctly, followed by questions focusing on saving (53%) and consuming (52%), the survey found.

Can You Answer These Questions Correctly?

TO READ MORE:  https://www.yahoo.com/finance/news/23-adults-got-three-quarters-143101841.html