Over one in three Americans are not considered financially literate

Washington, DC, April 27, 2022 — An Ipsos poll, conducted on behalf of Money Masters, finds that the average American rates themself as moderately financially literate, a finding supported by the share deemed financially literate* based on correctly answering questions on financial concepts. However, when comparing self-reported financial literacy to the results of the quiz, there is a segment of the population that is overconfident in their financial prowess. The quiz’s concepts include risk diversification, inflation, numeracy, and compounding interest. The poll also found demographic differences in financial literacy along the lines of age, household income, and education.  

Detailed Findings

1. The average American is only moderately confident in their level of financial literacy, while some are overconfident.

• The average American rates their level of financial literacy as a 6.2 out of ten.
• Boomers (6.1), Gen X (6.3), and Millennials (6.1) rate themselves as more financially literate than Gen Z (5.4).
• Those with a college degree (6.7) believe themselves to be more financially literate than those without one (5.7), as do Americans with higher household incomes compared to those with lower household incomes.
• Roughly one in four that consider themselves financially literate were found not to be based on the results of the quiz.

2. Though the majority of Americans are financially literate, a sizable minority are not. Self-rated demographic differences in financial literacy are bore out by the share answering questions across financial concepts correctly.

• Just under two-thirds of Americans (64%) are financial literate, while over one in three (36%) are not.
• Financially literate Americans are led by Baby Boomers (71%), Gen X (63%), and Millennials (59%) while Gen Z (42%) trails behind.
• Americans with a college degree are significantly more financially literate than those without one (74% and 55%, respectively).
• Three out of four Americans with a household income of over $100K are deemed financially literate (74%), while only half (50%) of Americans with a household income of under $50K are. Those with a household income of $50K to less than $100K fall in between (67%).

*Financial literacy is defined as having answered three out of the four concepts asked about correctly. This includes risk diversification (Q2), inflation (Q3), numeracy (Q4), and compound interest (Q5-Q6). Answering either Q5 or Q6 correctly counted as credit for the compound interest concept. These questions and the definition for financially literate came from the S&P Global FitLit Survey.

These are the findings of an Ipsos poll conducted on behalf of Money Masters between September 3-9, 2021. For this survey, a sample of 4,018 adults ages 18+ from the continental U.S., Alaska, and Hawaii was interviewed online in English. The poll has a credibility interval of plus or minus 1.8 percentage points for all respondents.

About the Study

These are the findings of an Ipsos poll conducted on behalf of Money Masters between September 3-9, 2021. For this survey, a sample of 4,018 adults ages 18+ from the continental U.S., Alaska, and Hawaii was interviewed online in English.

The sample for this poll was randomly drawn from Ipsos’ online panel, partner online panel sources, and “river” sampling and does not rely on a population frame in the traditional sense. Ipsos uses fixed sample targets, unique to each study, in drawing a sample. After a sample has been obtained from the Ipsos panel, Ipsos calibrates respondent characteristics to be representative of the U.S. Population using standard procedures such as raking-ratio adjustments. The source of these population targets is U.S. Census 2019 American Community Survey data. The sample drawn for this study reflects fixed sample targets on demographics. Post-hoc weights were made to the population characteristics on gender, age, race/ethnicity, region, and education.

Statistical margins of error are not applicable to online non-probability polls. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error and measurement error. Where figures do not sum to 100, this is due to the effects of rounding. The precision of Ipsos online polls is measured using a credibility interval. In this case, each poll has a credibility interval of plus or minus 1.8 percentage points for all respondents. Ipsos calculates a design effect (DEFF) for each study based on the variation of the weights, following the formula of Kish (1965). These studies have a credibility interval adjusted for design effect of the following (n=4,018, DEFF=1.5, adjusted Confidence Interval=+/-3.3 percentage points).

For more information on this news release, please contact:

Mallory Newall
Vice President
US Public Affairs
+1 202 374-2613
[email protected]

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