How Money Smart Are You?

Knowing about financial matters is more than just being smarter than your average 5th grader! It actually pays to know how to best structure your finances. People who are savvy with their money have the ability to achieve peace of mind and enjoy life more. Take this quiz and see how much you know about everyday financial products, processes and issues. Then we’ll tell you how you can improve on your knowledge and start gaining a financial edge!

What’s a good shortcut to determine how much you should save for retirement?

Your current salary has nothing to do with how much you should save for retirement.

Double your current salary.

Multiply your current annual salary by 12.

Multiply your current salary by 100.

Are contributions to a traditional 401(k) plan deducted from your salary before or after taxes?

Before

After

Wade owns a wide variety of stocks, bonds, and mutual funds to lessen his risk of losing money. This is called:

Saving

Diversifying

Compounding

Liquifying

How much money should you keep in your emergency fund?

5% of your current salary

$2,000

The equivalent of 3 to 6 months worth of living expenses

Nothing—just use your credit card

Your credit score can affect your ability to:

Get a loan

Get an apartment

Get a job

All of the above

If you're looking for a place to invest money you'll need in a year or two, stocks are the best place because they'll give you the best returns.

True

False

Late payments on credit cards and loans affect what percentage of your FICO credit score?

10%

15%

35%

45%

Anna has saved some cash and faces these choices. What would be the best thing for her to do?

Put it in her savings account

Invest in a mutual fund

Buy a U.S. Savings bond

Pay off the balance on her credit card that charges 18% interest

How often should you check your credit report?

At least once a year—from all three bureaus

Once every few years—from all three bureaus

When you're ready to make a big purchase (like a house or new car)

If your employer offers a match on 401(k) contributions, that should be your first stop for investing.

True

False

You've saved $25,000 for a down payment on a house. You plan to buy within a year. Which of the following is the safest place to keep your money?

In a safe at home

Stocks

Bonds

Bank savings account

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

Rise

Fall

Stay the same

What does IRA stand for?

Internal Revenue Account

Inherited Retirement Account

Individual Retirement Account

Individual Revenue Account

Negative financial information (excluding bankruptcy) can stay on your credit report for:

2 years

5 years

7 years

10 years

If your credit card is stolen and you report it to the issuer as soon as you realize it's missing, what is your maximum liability under federal law?

Nothing

$50

$100

$500

Which of the following best describes your net worth?

The total value of your assets minus your liabilities

How much money you have minus how much you owe

How much money is left from your paycheck after you pay your monthly expenses

Which of the following financial tools is especially important for parents?

A will

Life insurance

Durable power of attorney and heath care proxy documents

All of the above

What percent of your income should you put toward retirement?

10%-15%

50%

80%

Which federal agency provides deposit insurance to accounts held at banks?

FTC

NCUA

SEC

FDIC

Greg wants to take some of his savings and invest in a mutual fund because mutual funds are:

Managed by experts at picking investments

Guaranteed to earn more than savings accounts

Risk free