bank rates

Test Your Financial Literacy With These 3 Questions And Feel Better About Yourself

Poll QuestionNeither men nor women have bragging rights when it comes to financial literacy.

But at least women are honest about it.

The 2009 FINRA Investor Education Foundation Capability Survey, as well as national surveys in seven other countries, included three questions testing finance basics.

So you can test your financial literacy, too, they were (as published in the FINRA Investor Education Foundation April 2013 Insights):

  • Suppose you had $100 in a savings account and the interest rate was 2% per year. After five years, how much do you think you would have in the account if you left the money to grow? (Possible answers: More than $102; Exactly $102; Less than $102; Do not know; Refuse to answer)
  • Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After one year, how much would you be able to buy with the money in this account? (Possible answers: More than today; Exactly the same; Less than today; Do not know; Refuse to answer)
  • 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.” (Possible answers: True; False; Do not know; Refuse to answer)

So, not exactly brain surgery, right?

Sadly, in the United States, only 30% answered all three questions correctly, compared with 53% of Germans, 45% of Dutch and 27% of Japanese.

Broken down by gender, only 23% of U.S. women scored 100%, while 38% of men did.

But women were less likely to guess: 50% of women responded at least once with “Do not know,” while only 34% of men did.

How does this lack of financial literacy translate to the real world?

Time magazine reported on a 2012 expert panel at the Council for Economic Education, which discussed this research by Annamaria Lusardi, professor at the George Washington University School of Business and director of the Financial Literacy Center.

Women tend be slow to act where money is concerned, and they place utmost value on working with an adviser they trust, says Ann Kaplan, a partner at Circle Wealth Management. Men, by contrast, tend to make snap decisions and will work with anyone they believe can earn a higher return.

Now for our question of the week.

n

n

n

n

n

n

What's your financial style?
View Results

Don't miss out on the next bank deal. Get the newest deals delivered straight to your inbox!

Comments (0)
1 Star2 Stars3 Stars4 Stars5 Stars (4 votes, average: 5.00 out of 5)
Loading...
No Existing Comments

Comments are closed.