Financial Illiteracy Epidemic: 57% Of Americans Can't Even Score 50% On A Financial Literacy Test
If you think you’ve mastered financial basics, you’re either overconfident or in the minority. A new report from the Global Financial Literacy Excellence Center shows that the average American scored just 48% on a financial literacy test, with groups scoring as low as 37% in certain areas.
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Since the report’s inception in 2017, the results have been relatively stable: Americans have scored 48% to 52% correctly on the annual study. But only 16% of Americans scored between 75% and 100% on the test in 2024. This alarming statistic has far-reaching consequences for companies, the wider economy, and more than half all Americans.
While many will argue that gender, race, or generation don’t play a role in financial literacy, the results tell a different story. Here are a few of the most concerning statistics:
Women scored an average of 10 points lower than men.
Black and Hispanic Americans scored lower than Asian and white Americans.
On average, Gen Z correctly answered only 37% of the index questions in 2024, the worst performance of any age group.
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This lack of financial understanding has significant consequences in everyday personal finance. According to the study, those with very low levels of financial literacy were twice as likely to be debt-constrained.
The study also shows those with low financial literacy are:
3.5x more likely to be financially fragile.
4x more likely to not have even one month of emergency savings.
3x more likely to lack strong retirement income planning.
3x more likely to spend over 10 hours a week on financial issues.
Americans across ages, genders, and races consistently scored the worst in functional knowledge classified as "comprehending risk," answering an average of just 35% of questions correctly in 2024.
What is the solution? A Forbes article suggests that employers should create financial wellness programs. Recognizing that financial anxiety, distress or overwhelm can have long-term consequences for mental health, well-being, and organizational productivity, companies are rethinking financial education.
However, this requires major investments in employees’ financial health by embracing innovative, personalized, and engaging approaches to financial education. Done well, organizations could reap major rewards in long-term organizational health.
Is there a light at the end of the dismal financial tunnel Americans are struggling to escape? The power is in the hands of both individuals and organizations. Will we see real change? Only time will tell whether companies can gather the resources to reverse a long-standing trend plaguing many American families.
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