Americans’ financial literacy slumps to a 10-year low, new study finds

Financial literacy among Americans has hit a 10-year low, according to a recent study conducted by TIAA and Stanford University’s Global Financial Literacy Excellence Center. The study revealed that in 2025, U.S. adults only answered 47% of financial literacy questions correctly, down from 52% in 2020. This decline is concerning as it indicates that households may be ill-prepared to manage debt, savings, and retirement decisions.

One of the main reasons for the decrease in financial literacy is the rise in the number of Americans with very low financial knowledge, which has increased to 25% in 2025 from 20% a decade ago. This lack of understanding can lead to detrimental outcomes, such as higher levels of debt. Surya Kolluri, the head of TIAA Institute, highlighted that individuals with lower financial literacy are four times more likely to struggle with financial stability.

The study also found that women and younger adults scored lower on financial literacy questions compared to other groups. Women answered only 44% of the questions correctly, while Gen Z adults, aged 18 to 29, had the lowest score at 38%. On the other hand, baby boomers scored the highest at 54%, partly due to their age and experience with financial matters.

Experts point out that the financial system has become increasingly complex, making it challenging for consumers to understand the products they are buying or signing up for. This complexity, coupled with misleading financial information on social media, can contribute to the decline in financial literacy. Additionally, financial industry critics argue that companies often complicate their products, making it difficult for consumers to make informed decisions.

To address the issue of declining financial literacy, some experts suggest simplifying the financial system to make it more accessible to the general public. However, basic financial concepts remain the same, and it is crucial for individuals to have a solid understanding of these fundamentals. With the abundance of financial information available online, distinguishing between reliable advice and misinformation has become increasingly challenging.

In conclusion, improving financial literacy is essential for individuals to make informed decisions about their finances. By increasing knowledge and understanding of basic financial concepts, Americans can better navigate the complexities of the financial system and secure their financial futures.

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