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

November 2019

This report uses the third wave of the P-Fin Index to examine the current state of financial literacy and financial wellness among African-American adults.

Summary

Financial literacy is knowledge and understanding that enable sound financial decision making and effective management of personal finances. A more refined understanding of financial literacy among African-Americans, including areas of strength and weakness and variations among subgroups, can inform initiatives to improve financial well-being. There is a strong link between financial literacy and financial wellness among African-Americans.

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Key Insights

On average, African-Americans answered 38% of the P-Fin Index questions correctly.

Insuring is the functional area where personal finance knowledge is lowest among African-Americans.

Borrowing and debt management is the area of highest personal finance knowledge among African-Americans.

Personal finance knowledge among African-American adults lags that of whites. On average, whites answered 55% of the P-Fin Index questions correctly.

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.

Methodology

The P-Fin Index is an online survey fielded each January with a sample of U.S. adults; the 2019 sample consisted of 1,008 individuals. At each administration of the survey, a particular demographic group is oversampled to enable more detailed analysis. In 2019, 1,015 African-American adults were oversampled.

A more refined understanding of financial literacy among African-Americans, including areas of strength and weakness and variations among subgroups, can inform initiatives to improve financial well-being.