Quiz time! How financially literate are you?


In 2008, professors at George Washington University and the University of Pennsylvania designed three questions in a study called The Economic Importance of Financial Literacy: Theory and Evidence with which to examine the financial literacy of consumers around the globe.

The results weren’t all that encouraging.

In the U.S., a little more than one-third of respondents were able to able to answer all three questions correctly. The largest proportion of respondents able to answer all questions correctly came out of Germany and Switzerland, at 53 and 50 percent respectively. About 67 percent of respondents in the U.S. answered the compound-interest related question correctly.Three quarters answered an inflation question correctly. However, just 52 percent of respondents answered the stock risk question correctly.

The U.S proved to show the lowest levels of financial literacy compared with Germany, Switzerland, and the Netherlands, though Americans aged 51-65 scored the best among all the age groups in their country, with 40 percent answering all three questions correctly. A gender divide proved true with women scoring lower than men across all top-scoring countries.

Quiz time!

Ready to test your skills? See if you can answer the questions below and prove your financial literacy. If you can answer all three questions correctly, consider yourself more financially-versed than most.

  • Suppose you had $100 in a savings account and the interest rate was 2 percent 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) Do not know

e) Refuse to answer

  • Imagine that the interest rate on your savings account was 1 percent per year and inflation was 2 percent a year. After one year, would you be able to buy:

a) More than today with the money in this account

b) Exactly the same as today with the money in this account

c) Less than today with the money in this account

d) Do not know

e) Refuse to answer

  • 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.” 

a) True

b) False

c) Do not know

d) Refuse to answer

The results are in

The correct answer to the first question: a) More than $102.

The correct answer to the second question: c) Less than today with the money in this account.

And finally, the correct answer to the last question: b) False.

How’d you do?

If you answered all three questions correctly, congratulations! If not, don’t worry – there’s still work to be done, but we have you covered.

The study concluded that the cost of improving financial illiteracy is far less than the cost of the effects and consequences of financial illiteracy. The authors made several suggestions aimed at improving one’s financial literacy, including:

Grow your mind, grow your money – it’s that simple.