Do you know more about money than Americans?

These 3 key questions gauge financial literacy

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From the June 2015 issue of the magazine.

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(Photo by George Marks/Retrofile/Getty Images)

(Photo by George Marks/Retrofile/Getty Images)

The results of a new global financial literacy survey are in and they’re not pretty. It turns out that most Westerners are pretty clueless about money matters. Researchers used three basic questions to gauge financial literacy, and in the U.S. a measly 44% of those with college degrees got all three correct. The results were even worse for those with less education—and women generally fared worse then men. How would you compare? Canada wasn’t included in the survey, but you can take the test below to find out how you stack up.

1. Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow?

a) More than $102

b) Exactly $102

c) Less than $102

2. Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, how much would you be able to buy with the money in this account?

a) More than today

b) Exactly the same

c) Less than today

3. Please tell me whether this statement is true or false. “Buying a single company’s stock usually provides a safer return than a stock mutual fund.”

a) True

b) False

 

(q)Ɛ (ɔ)ᄅ (ɐ)Ɩ :sɹǝʍsu∀

Source: Pension Research Council, Philadelphia, PA

12 comments on “Do you know more about money than Americans?

  1. I got b and c correct and according to your answers, a incorrect. I believe the 100 would be worth less than 102 after five years due to fees associated with savings accounts!

    Reply

    • Have you not negotiated a savings account without fees?

      Reply

    • Most savings accounts are free — although, admittedly, some banks are now charging a modest fee for each deposit and withdrawal. Ignoring fees, your savings account at the end of 5 years would have the initial $100 plus interest accumulated over the 5 years including the compounding interest earned on the interest revenue from earlier years — therefore you’d have well over $110.

      Reply

  2. It may not be Americans’ lack of financial literacy at work in their poor scores in this test. It may just be that their poor education system leaves them mathematically illiterate.

    Reply

  3. I find it very hard to believe that less than half of college graduates got all three of these answers correct; in fact, I don’t believe that most high school students wouldn’t get them all right.

    Reply

  4. Got all 3 correct, these are not difficult at all.

    Reply

  5. Hardly a test of financial literacy

    Reply

  6. I do not think Canadians would score much better What really gets me how Canadians do not understand how their pensions work [OAS& Supplement & CPP RRIF RRSP TFSA}] This is such an important area for our so called Golden Years

    Reply

    • Yes but i think even those they pretend they understand it (actually they are paid for that) i think they don’t…because once a professional start telling you…to the best of my knowledge …you know he doesn’t know

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  7. That was easy, scored 100%

    Reply

  8. Wow. This is even scarier than I would have imagined. Working with clients daily, I’ve come to realize that most people are busy with life, and either haven’t made time, or had the interest to understand more about investing. As long as they appreciate this, and know to look for trustworthy professionals to help them, this is fine. However, its still important to at least have some fundamental knowledge.

    Reply

  9. I think the title should be the american lack common sense… if you are financially an idiot you could get the 3 questions right…there was no calculation involved at all…just a common sense

    Reply

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