Test your financial literacy with the “Big Five” questions

 The following questions have been used in multiple countries to asses financial literacy. How literate are you?

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
D) Don’t know

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
D) Don’t know

3) If interest rates rise, what will typically happen to bond prices?

A) They will rise
B) They will fall
C) They will stay the same
D) There is no relationship between bond prices and the interest rate
E) Don’t know

4) A 15-year mortgage typically requires higher monthly payments than a 30-year mortgage, but the total interest paid over the life of the loan will be less.

A) True
B) False
C) Don’t know

5) Buying a single company’s stock usually provides a safer return than a stock mutual fund.

A) True
B) False
C) Don’t know

Answers at: https://gflec.org/education/financial-literacy-answers/#5

Wealth & Financial Literacy Linked

Using data from 1,596 older adults in the national Health and Retirement Study, a university of Massachusetts researcher "found that advanced financial literacy levels, which include familiarity with stock market investments and investment risk, are associated with higher levels of wealth accumulation. In fact, respondents with strong financial literacy had, on average, $71,187 more than those with weak financial literacy." Kimberly Palmer explains the study at: http://money.usnews.com/money/personal-finance/articles/2015/02/04/the-secret-of-wealthy-older-adults
"For older adults who want to improve their financial literacy, Chae suggests seeking out local programs related to money management. In some communities with colleges and universities, students volunteer to help older adults through workshops and other programs. Websites, including myretirementpaycheck.org from the nonprofit National Endowment for Financial Education and the government’s mymoney.gov, are also helpful for DIY learning."So attend Financial Planning for Women each month.

Want higher investment returns? Get educated!

Financial Knowledge = Higher Investment Returns
“Financial knowledge is critical to one’s retirement security, finds a new study showing that 401(k) plan participants who scored higher on a test of their financial knowledge earned an additional 1.3 percentage points of investment returns annually on their retirement accounts.” 1.3% may not sound like much but compounded “over a 30-year working life, that higher rate of return would add 25 percent to total savings at retirement.” Are you financially savvy? Take the 5-item quiz by clicking here; answers appear at the end of this blog post. From the Squared Away blog: http://squaredawayblog.bc.edu/squared-away/financial-savvy-means-more-401k-returns/

Think You’re Financially Literate?

More than three-quarters of U.S. adults think they are good at managing their finances. Only 14 percent, however, got the right answers to a 5-question quiz on basic financial concepts like interest rates, mortgages and inflation according to a State-by-State Financial Capability Survey released by the FINRA Investor Education Foundation. Take the quiz and see how you compare to the national results:  http://www.usfinancialcapability.org/quiz.php?utm_source=MM&utm_medium=email&utm_campaign=Foundation_News_060613_FINAL

How do you stack up on financial practices?

The latest study by FINRA of Americans' financial practices, the "State-by-State Financial Capability Survey" reveals: 
-"Fewer than half, 41%, of Americans spend less than they make.
-Over a quarter, 26%, have unpaid medical bills and those under 34 years old are more likely to have them than those who are older.
-More than half, 56%, have no rainy-day savings enough to cover surprise financial distress.
-Over a third, 34%, pay only the minimum amount on their credit cards.
-Younger Americans are more likely to show signs of financial stress.
-Of five basic questions about personal finance, the national average was 2.88 correct answers."
The full survey report is available at www.usfinancialcapability.org.Authority
All the more reason to attend Financial Planning for Women and get reinforcement for your positive behaviors!

Girl Scout study of girls' financial literacy

"Girls age 8 to 17 are upbeat about their future prospects, but just 12% say they're confident about making financial choices, a survey from the Girl Scout Research Institute shows. About 40% said they don't know how to use a credit card, and only 38% knew what a credit score is." Parents need to spend more time educating their children about financial management. Most kids learn by watching their parents which may not be the best introduction to prudent financial attitudes and practices. Learn more from KTVX (abc) in Salt Lake. http://www.abc4.com/content/news/state/story/Girl-Scout-study-about-financial-decisions/0mpJYRs9wEGVZ1FMa8GoQg.cspx