You may be more money savvy than you think. Or on the other hand, you might need to brush up on the fundamentals of personal finance. Here is a quick, fun quiz to test your financial literacy in areas like earning, borrowing, investing, and protecting your wealth.
On a scale of 1-5, rate the below statements based on your agreement with them. For example, a 1 means "I completely disagree." A 5 would mean "I agree completely." Use the numbers 2, 3, and 4 for the middle of the road answers.
- Many sources of money advice say avoid debt at all cost, but I believe it can be a useful tool given the right circumstances.
- Before taking out a loan, I shop other lenders' interest rates and terms.
- When borrowing, I know why an agreement with shorter terms usually means a higher monthly payment than one that's spread out over a longer period.
- I know how to use loans and credit cards to strengthen my credit score.
- Job benefits vary in their value and I carefully research all the job perks my boss offers to determine their helpfulness to my financial situation.
- Job training, trade certifications, and ongoing professional education and development are important ways to increase my earning potential.
- I keep at least 3 months of living expenses in an emergency fund just in case something happens where I cannot earn for a while.
- I know where all my financial records are kept.
- I know who to contact if my identity (and/or financial information) is compromised.
- I save a part of my income every month.
- I can define the term "compound interest," and I know how it applies to me.
- Everyone should be contributing to a retirement account, even if they can only afford to put in a small amount regularly.
- A stock mutual fund is usually less risky than a single company's stock.
- Before making a large purchase, I review my anticipated income for the next few months, as well as my expenses.
- A budget (or "spending plan") can help me achieve my financial goals.
Add up your points to find out your score.
If you scored between 60 and 75 points, you could teach the financial literacy class. You value staying updated on financial topics like best practices, money advice, available financial products, and market trends.
If your score is between 45 and 60, you likely know that your financial future is up to you, but need help executing all the good decisions you know you should make. For example, setting a budget and sticking to it. Thankfully, you're in the right place. Subscribing to blogs like this one will help keep you educated, motivated, and self-possessed.
Scoring below 45 means you should learn the basics of money management. The good news is the information is free, easy-to-digest, and actionable today. To get started, visit MyMoney.gov.
The first step on the road to financial freedom is knowledge. For questions or comments, please phone your local friends at the nearest Coosa Valley Credit Union.
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