Financial Literacy and Wellness Among African-Americans: New Insights from the Personal Finance (P-Fin) Index

Document Type

Issue/Research Brief/Blog

Publication Date



general population, financial status and behavior, race and ethnicity


The nation’s 44 million African-Americans account for 13% of the U.S. population and have a significant impact on the economy, with $1.2 trillion in purchases annually. Yet the financial well-being of African-Americans lags that of the U.S. population as a whole, and whites in particular. The reasons for these gaps are complex, but one area of importance in addressing them is increased financial literacy.

Financial literacy is knowledge and understanding that enable sound financial decision-making and effective management of personal finances. As such, improved financial literacy contributes to improved financial well-being. This report uses the third wave of the TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) to examine the current state of financial literacy and financial wellness among African-American adults. Key findings include:

  • Personal finance knowledge among African-American adults lags that of whites. On average, African-Americans answered 38% of the P-Fin Index questions correctly, with only 28% answering over one-half of index questions correctly. The analogous figures among whites were 55% and 62%, respectively.
  • Financial literacy varies across demographic groups within the African-American population. The observed patterns are consistent with variations identified in the U.S. population as a whole—financial literacy is greater among men, older individuals, those with more formal education, and those with higher incomes.
  • Insuring is the functional area where personal finance knowledge is lowest among African-Americans, but it is also essentially just as low in the areas of comprehending risk, investing and identifying go-to information sources.
  • Borrowing and debt management is the area of highest personal finance knowledge among African-Americans.
  • There is a strong link between financial literacy and financial wellness among African-Americans. Those who are more financially literate are more likely to plan and save for retirement, to have non-retirement savings and to better manage their debt; they are also less likely to be financially fragile.

A more refined understanding of financial literacy among African-Americans—their level of overall financial knowledge, areas of strength and weakness, and variations among subgroups—can inform initiatives to improve financial well-being. While not a cure-all, increased financial literacy can lead to improved financial capability and practices that benefit even those with relatively low incomes.