Financial Literacy Quiz

 In Financial Literacy and Education

The Financial Literacy Quiz (5 minutes)

Financial literacy is in the news and a recent survey showed disappointing levels of financial literacy in the Australian population. So we thought you might be interested to test yourself.

The HILDA Survey* (Household, Income and Labour Dynamics in Australia Survey) use the following questions to assess the financial literacy of Australian householders. You can take the test yourself. Answers will appear at the very bottom of the post.

Question 1:

Suppose you put $100 into a no-fee savings account with a guaranteed interest rate of 2%. You don’t make any further payments into this account and you don’t withdraw any money. How much would be in the account at the end of the first year, once the interest payment is made?

……………………………………

Question 2:

Imagine now that the interest rate on your savings account was 1% per year and inflation was 2% per year. After one year, would you be able to buy more than today, exactly the the same as today, or less than today with the money in this account?

…………………………………….

Question 3:

Do you think that the following statement is true or false?:

“Buying shares in a single company usually provides a safer return than buying shares in a number of different companies.” True or false?

…………………………………….

Question 4:

Again, please tell me whether you think that the following statement is true or false:

“An investment with a high return is likely to be high risk.” True or false?

……………………………………

Question 5:

Suppose that by the year 2020 your income has doubled, but the prices of all the things you buy have also doubled. In 2020, will you be able to buy more than today, exactly the same as today, or less than today with your income?

……………………………………..

Correct answers at the bottom of the post.

 

Women's financial literacyRhiannon was recently interviewed for SBS World News on the survey results and the apparent disparity between men and women.

*This is a highly regarded longitudinal study of Australians across a wide range of areas from household and family relationship, income and employment to health and education. The unique design of this survey follows the participants over their lifetimes and across a rich data set. The survey brought a up few key headlines on trends in housework, workforce participation, wage growth, childcare and energy costs. You read the full report at https://melbourneinstitute.unimelb.edu.au/__data/assets/pdf_file/0005/2839919/2018-HILDA-SR-for-web.pdf

 

 

 

 

 

 

 

CORRECT ANSWERS:

Question 1: $102

Question 2: Less

Question 3: False

Question 4: True

Question 5: Exactly the same

Your score how many correct answers?

 2 or fewer This quiz was a bit of a struggle, this might be the first time you’ve thought about things in this way. Many people struggle with these concepts because they’ve never been taught. Don’t despair you’re not alone. With a bit of assistance chances are you’ll be able to pick up these key concepts and set the foundation for long-term financial security.
 3 or 4 Good work, you’ve got a solid foundation but with a few areas to brush up on. Take the time to seek out some additional information about your finances and perhaps get a little help to make the most our your current finances
 all 5 Well done, you’ve aced the test. Before you go, have a think about whether you are putting all this good knowledge to practical use. Have you thought about how these concepts apply to your own financial situation and whether you are making the most of your financial opportunities.

Where to from here?

If you’d like to improve your financial literacy there are a range of options available to you. You might like to check out Finance Women’s blog for other educational articles about personal finances, book in an educational webinar, or even a financial planning session to give your financial security and independence the best start possible.

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