Increased inflation and market volatility, a global pandemic, and complex emerging financial technologies such as cryptocurrency, NFTs, and BNPL, all compound the weight of the financial decisions Americans make every day. Add to that unequal and inconsistent access to financial education and adults are faced with an ever-increasing need to seek out financial literacy wherever they can find it.
Building on Investopedia’s Affluent Millennials study, Investopedia conducted the 2022 Investopedia Financial Literacy Study to identify where a representative sample of American adults want additional support so that we can help them address the need for that information.
The aim of the 2022 Investopedia Financial Literacy Study is to quantify how knowledgeable and prepared four generations of American adults feel to handle their own financial decisions. The study asked participants to assess their financial knowledge across eight key areas:
- Borrowing: managing debt, loan features, and repayments
- Consuming: managing spending, keeping a budget
- Digital currency: cryptocurrency, blockchain, and NFTs
- Insurance: types of coverage and how insurance works
- Investing: different investment types, risks, and returns
- Paying taxes: how and when to file, exemptions
- Retirement: planning for the future, contribution amounts
- Saving: maximizing your savings, knowing how much to save
Rather than test participants on their financial knowledge, the study asked participants to characterize their own understanding to better identify the areas in which they feel confident and to see what skills they feel are most important to learn. The study also surveyed participants about:
- Financial worries
- Where they seek new information
- How they prefer to learn
- Expectations for investing, retirement, and cryptocurrency.
The 2022 Investopedia Financial Literacy survey was fielded via an online self-administered questionnaire from Jan. 27 to Feb. 7, 2022, to 4,000 U.S. adults. Respondents from an opt-in market research panel were invited to take part in the survey via email and provided with a monetary incentive for doing so. To qualify, participants must have lived in the U.S. and at least partially manage their own finances.
To understand each generation’s perception of their financial literacy, we surveyed 1,000 Americans from each generation (Generation Z, millennials, Gen X, baby boomers) and used quotas to ensure representation within each generation for these key characteristics, using U.S. Census (ACS 2019) estimates as a benchmark (see chart below).
At the end of the survey, respondents were asked to report their individual and household incomes. For the final data to more accurately reflect the income distribution of the U.S., data weighting was then applied to the sample. First, household income was adjusted to account for regional price parities within a respondent’s state (i.e., cost-of-living adjustment) using data from the Bureau of Economic Analysis (BEA) as a benchmark.
Adjusted household income from the survey was then compared with 2020 Census data to evaluate representativeness within the sample. To evaluate income more accurately, additional weights were calculated within each generation and racial/ethnic group (e.g., Black millennials, Hispanic baby boomers, etc.) to ensure accurate representation within each group.
No sample is perfectly representative of its larger group; in our survey, this means that lower income Generation Z, Gen X, and baby boomers are over-represented compared with U.S. Census benchmarks. This is a result of the natural fallout of survey respondents and how we have weighted the responses to prioritize representation among racial subgroups. Since lower-income Americans shoulder disproportionate financial risk, the need to make sound financial decisions is even more meaningful. We found these deviations to ultimately not contradict the main objective of the survey, which is to understand Americans' financial literacy gaps and anxieties in order to provide them with the information they need at every life stage.
Additionally, to conduct this survey, Investopedia used an online opt-in market research sample provider. While this practice is common for consumer polls and makes surveying the public much more accessible, this method lacks the broader applicability of randomized sampling.
Finally, this survey sample contains only adults up to age 76. We did not survey adults 77 and older, nor did we survey teens, despite the fact that both groups are also making financial decisions, and share the need for financial literacy. We made the choice to limit the scope of our research to adults aged 18 to 76 in order to maintain a generational lens, and also because both adults 77 and older and teenagers are populations that are challenging to survey online, requiring resources outside of the scope of the project.
Investopedia used learnings from a variety of sources and reports as additional background research for this study, including the Milken Institute Financial Literacy in the United States Report, the National Foundation for Credit Counseling (NFCC) Annual Consumer Financial Literacy Survey, and the TIAA Institute-GFLEC Personal Finance Index. The weighting schema was developed in consultation with Chirp Research.
Special thanks to the editorial staff at Investopedia for their attention and dedication to the construction of this study, as well as their personal finance and investing expertise.