Adults in the US are struggling to understand important money concepts, and the issue is getting worse, a new study finds.
The personal finance index, a national financial literacy questionnaire developed by Stanford University and financial services firm TIAA, recently posted its lowest reading in a decade. On average, respondents answered 47% of the questions correctly.
“Financial literacy is an important life skill, just like reading and writing,” said Annamaria Lusardi, a Stanford University economist and co-author of the study, in a news release. “A decade of data shows we’re not where we need to be, and this year’s results make the urgency hard to ignore.”
In 2026, more than 3,600 Americans take the questionnaire, which assesses the respondent’s daily financial knowledge in the following eight areas: earning, buying, saving, investing, managing debt, insuring, understanding risk and evaluating information sources.
The highest average score was 52% in 2020. Since then, the score has dropped significantly. Last year, the average score was 49%. The researchers say in the report that positive changes in public knowledge take time, so rapid improvements are not expected.
Low financial literacy is not just an academic concern, they argue. Research has found that people who score low are more likely to struggle with money in the real world.
Respondents with low financial literacy (defined as answering 25% or fewer questions correctly) were 4 times more likely to say they had trouble making ends meet every month, and more than 3 times more likely to say they spent at least 10 hours a week dealing with money problems.
The National Financial Educators Council, a separate group that tracks financial literacy in the US, recently published similar findings. The advocacy group said in March that most Americans fail to meet a “minimum proficiency level” in financial literacy.
Can you pass this personal finance quiz?
The following eight questions below were selected by Stanford researchers and TIAA as a representative of the full 28-question survey.
How many can you fix? The correct answers are found below.
1. To lead — Mark’s salary has increased over the past two years. What could be a valid reason for this?
A. The number of workers with Mark’s skills increases where he lives and where he works
B. Mark completed several training courses at a local college
C. New technology reduces the need for Mark’s skilled workers
D. I don’t know
2. Using money — The household budget cannot be used for which of the following?
A. Planning for necessary household expenses
B. To plan spending according to household discretion
C. Tracking household financial assets
D. I don’t know
3. Savings – Akiko has $1,000 in savings earning an average 2% return over the course of a year. The inflation rate during the year is 3%. Which statement is true?
A. He can buy a few things at the end of the year
B. He can buy more things at the end of the year
C. It is not clear whether he will be able to buy more or fewer things at the end of the year
D. I don’t know
4. Investment — Which statement about investing is correct?
A. Investing in the stock of one company is generally safer than investing in a mutual fund that holds stocks of many companies in many industries.
B. Investing in the stock of one company and investing in a mutual fund that holds stocks of many companies in many industries are generally equally safe.
C. Investing in a mutual fund that holds shares of many companies in many industries is generally safer than investing in a single company’s stock.
D. I don’t know
5. Managing debts — José owes $1,000 on a mortgage with 20% interest per year compounded annually. If he defaults on the loan, at this interest rate, how many years will it take him to double the amount he owes?
A. More than 10 years
B. 5 to 10 years
C. Less than 5 years
D. I don’t know
6. Making insurance — Katherine is a 25-year-old single worker in good health. What type of insurance is he likely to need in the near term?
A. Disability insurance
B. Life insurance
C. Long-term care insurance
D. I don’t know
7. Understanding Risk – Lottery A pays a prize of $200, and the chance of winning is 5%. Lottery B pays a prize of $90,000 and the chance of winning is 0.01%. Which lottery has the highest expected winnings?
A. Lottery A
B. Lottery B
C. They are equal
D. I don’t know
8. Checking sources – Which of the following pieces of investment advice seems inappropriate for that person?
A. A stock index fund for a 30-year employee saving for retirement
B. A stock fund that invests in small business start-ups for a 75-year-old retiree
C. A bond fund for a 60-year-old worker to receive some of his retirement income
D. I don’t know
(Correct answers: 1-B, 2-C, 3-A, 4-C, 5-C, 6-A, 7-A, 8-B.)
