The test was created by the TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC). According to the researchers who conducted the test, just 5% of U.S. adults correctly answered all eight questions. In contrast, 13% got none of the answers correct. The average U.S. adult correctly answered less than four of the eight questions — 3.7 of them, to be exact.

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This and other sobering findings are discussed in the recently released report, the "2026 TIAA Institute GFLEC Personal Finance Index." This is the 10th consecutive year in which the TIAA Institute and GFLEC have measured U.S. adult financial literacy. This year's test scores were the lowest yet — with a 5-percentage-point drop in financial literacy just since 2020.

The point of the test is not to make us feel bad about our financial knowledge, but to help improve our financial outcomes. The researchers documented a strong correlation between financial literacy and financial well-being. They found that compared with U.S. adults with "very high literacy," those with "very low" financial literacy are:

• Four times more likely to have trouble making ends meetOver two times as likely to be debt-constrainedThree times more likely to be financially fragileFour times more likely to lack nonretirement savings sufficient to cover one month of living expensesOver three times more likely to spend 10 hours or more per week thinking about and dealing with personal finance issues and problems.

Overcoming financial illiteracy

In this case, there is evidence that greater "knowledge leads to better behavior," according to Annamaria Lusardi, a Stanford University economics professor and a co-author of the 2026 Personal Finance Index report. "Financial knowledge and education generally lead to better financial outcomes, not the other way around," she said in an interview.

Furthermore, Lusardi added, not all forms of financial education are equally effective. The most impactful financial education occurs before someone has begun to invest, such as in high school or college, she said. That's not because education later in life isn't useful. But after an investor has begun to participate in the markets, he or she may have developed biases that are hard to overcome.