Gen Z has the lowest financial literacy

Low financial literacy creates significant financial challenges for every generation, but young Americans are focused on improving their knowledge. Credit: George Washington University

According to a new report from the TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) at the George Washington University (GW) School of Business.

Although financial literacy tends to be highest among baby boomers and the silent generation, the average percentage of questions answered correctly is still only 55% for each. Among Gen X, Millennials, and Gen Z, the percentage of correct answers to the P-Fin Index questions are 49%, 48%, and 43%, respectively.

While Gen Z has the lowest levels of financial literacy, trends in financial wellbeing indicators show that Gen Xers face the greatest financial challenges. Twenty-eight percent of Gen X respondents report having difficulty making ends meet in a typical month, significantly more than any other generation. About 20% of Gen Z, Millennials and Baby Boomers, and 11% of the Silent Generation say they struggle to make ends meet.

“These results indicate that individuals generally start adulthood with low financial literacy and although it increases over time, financial literacy nevertheless tends to remain low,” said Paul Yakoboski, senior economist at the Institute. TIAA. “Furthermore, financial well-being across generations tends to be more compromised among people with low levels of financial literacy.”

The economic uncertainty created by the COVID-19 pandemic has underscored the need for Americans to improve their personal financial knowledge, and 39% of survey respondents now say they are motivated to focus on their financial literacy. This feeling is more common among younger generations, with Gen Z, Y and X respondents reporting feeling the most focused (52%, 48% and 44%, respectively).

“The number of Americans who lack financial literacy, especially among our younger generations, is deeply concerning,” said Annamaria Lusardi, Founder and Academic Director of GFLEC and University Professor at GW. “Until financial education is offered in schools, colleges and workplaces, we will continue to see generations of adults struggling with their personal finances.”

The P-Fin Index is an annual barometer of the financial literacy of the American adult population. It measures the knowledge and understanding that enables sound financial decision-making and effective management of personal finances. The P-Fin Index is based on responses to a 28-question survey covering eight domains in which individuals inherently function.

  • Earnings: determinants of salaries and net salary.
  • Consume: budgets and expense management.
  • Savings: factors that maximize accumulations.
  • Investment: types of investment, risk and return.
  • Borrow/Manage Debt: Relationship between loan features and repayments.
  • Insure: types of coverage and how insurance works.
  • Understand risk: Understand uncertain financial outcomes.
  • Go to sources of information: recognize appropriate sources and advice.

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More information:
Financial Literacy and Well-Being in an America of Five Generations: … e-generation-america

Provided by George Washington University

Quote: Study: Gen Z has the lowest financial literacy (October 20, 2021) Retrieved March 9, 2022 from

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Sarah J. Greer