The 2025 TIAA-GFLEC Study Confirms It: Low Financial Literacy Makes You 3 Times More Financially Fragile

"Adults with very low financial literacy, defined as answering 25% or fewer of the index questions correctly, are three times more likely to be financially fragile than those answering 75% or more correctly."

"Financial fragility has a specific definition, and it's something everyone should know: it's the inability to come up with $2,000 for an unexpected expense within a month. The framing matters because it converts knowledge into solvency and treats the gap between knowing and not knowing as a balance-sheet event rather than an academic one."

"Since the index launched in 2017, U.S. adults have consistently answered roughly 49% of the P-Fin Index questions correctly, with no meaningful improvement from 2017 through 2025. Over that same period, the average household has been asked to absorb a pandemic, a refinancing boom and bust, the return of inflation, the highest federal funds rate in a generation, and the partial reversal of that cycle."

"While income has climbed to $68,617, those extra dollars are going out the door instead of into a safety net. The 2025 P-Fin Index shows that for households without a budgeting framework, a raise is almost always absorbed by increased spending. This lack of literacy is a direct barrier to financial stability, as adults with very low levels of literacy are 3x more likely to be financially fragile and 5x more likely to lack emergency reserves."

Adults with very low financial literacy answer 25% or fewer of money questions correctly and are three times more likely to be financially fragile. Financial fragility is defined as the inability to produce $2,000 for an unexpected expense within a month. Financial literacy levels have stayed near 49% correct since 2017 through 2025, despite major economic disruptions. Income has risen to $68,617, but additional income often goes to higher spending rather than building savings for households without budgeting frameworks. Low literacy blocks financial stability by reducing emergency reserves, leaving many earners below the $2,000 emergency threshold.

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