American adults’ understanding of basic financial concepts has declined to its lowest point in a decade, according to a 2025 study by investment firm TIAA and Stanford University’s Global Financial Literacy Excellence Center. The survey found U.S. adults answered only 47% of financial literacy questions correctly, down from a peak of 52% in 2020.
What happened
The 2025 financial literacy assessment, which included 28 questions on topics such as budgeting, inflation, investing, and insurance, revealed a growing share of Americans with very low financial literacy. This group increased to 25% in 2025, up from 20% ten years earlier. Women scored 44% correct compared to 50% for men, while younger adults, particularly Gen Z (ages 18 to 29), had the lowest scores at 38%, with baby boomers scoring highest at 54%.
Experts attribute the decline to factors such as misleading financial information on social media, overall weaker literacy, and economic pressures including high student debt and challenges in home ownership for younger generations. Financial industry complexity and opaque product details may also contribute to consumers’ difficulties in understanding key concepts.
Survey head Surya Kolluri of the TIAA Institute emphasized that low financial literacy correlates with adverse financial outcomes, noting individuals with the lowest understanding are four times more likely to struggle financially. LendingTree’s Matt Schulz pointed to the challenge consumers face discerning credible financial advice amid the vast and often unreliable information available online.
Why it matters
The decline in financial literacy raises concerns about Americans’ preparedness to manage critical financial decisions, including debt repayment, savings growth, and retirement planning. Low literacy can drive increased debt, reduced savings, and poorer financial stability. As the financial system grows more complex, a lack of fundamental knowledge undermines households’ ability to navigate these challenges effectively.
This widening knowledge gap may exacerbate economic insecurity, especially among younger and female demographics who scored lower in the survey, potentially impacting long-term financial health and retirement outcomes.
Background
The financial literacy study has been conducted annually for a decade by TIAA and Stanford University, providing a benchmark for Americans’ understanding of personal finance. Although the basics of financial knowledge remain constant, the proliferation of complex financial products and abundant online information complicates consumer decision-making. The COVID-19 pandemic and evolving economic landscape have likely intensified financial challenges, prompting renewed focus on financial education and system reforms to improve transparency and consumer protection.
Sources
This article is based on reporting and publicly available information from the following source:
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