Are You Financially Literate? Do this Simple Test to Find Out by Annamaria Lusardi.
a) More than $102
b) Exactly $102
c) Less than $102
d) Do not know
2) Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, would you be able to buy more than, exactly the same as, or less than today with the money in this account?
a) More than today
b) Exactly the same as today
c) Less than today
d) Do not know
3) Do you think that the following statement is true or false? “Buying a single company stock usually provides a safer return than a stock mutual fund.”
c) Do not know
To be “financially literate” you need to answer correctly to all three questions.
And I would add, just answering those 3 simple questions does not mean you are. But if you don’t answer all 3 correctly you are not financially literate. We provide several resources to help people improve their literacy, including: our blog posts on financial literacy, Curious Cat Investing Dictionary and Curious Cat Investing Books.
Related: Questions You Should Ask About Your Investments – Annual Percentage Rate (APR) – Ignorance of Many Mortgage Holders
Interesting papers by Annamaria Lusardi: The Importance of Financial Literacy: Evidence and Implications for Financial Education Programs – Financial Literacy: An Essential Tool for Informed Consumer Choice?
1. a) More than $102
2. c) Less than today
3. b) False