So, you’ve figured out where you stand on the Global Rich List. You are up there in the top percentile and you probably think you’ve got it all worked out. Right? Well, did you know that 63% of Americans don’t have enough savings to cover a $500 emergency? That means a majority of the U.S. would have to borrow, or cut back on spending elsewhere, to pay for an unexpected car repair bill for example.
Financial literacy is the ability to understand how money works in the world. If you are financially literate you have the skills that allow you to make informed and effective decisions relating to your money.
Maintaining a sufficient emergency fund is just one small part of a sensible and effective approach to personal finance. Have you ever given thought to:
- what a ‘2%’ interest rate means for your bank balance
- how inflation affects the value of the dollar in your pocket
- the real price of a longer mortgage term on your home
- the concept of risk, say to compare saving money in a bank account or investing in stocks
There is a Nigerian proverb that goes “Not to know is bad. Not to want to know is worse”. Too many of us don’t want to know. Yet understanding these topics is as vital as knowing how to drive, or how to cook, or even how to dress yourself in the morning. Financial mistakes can be costly and it is up to us to truly educate ourselves.
The Financial Literacy Quiz
Not to know is bad.
Not to want to know is worse.
For several years now the U.S. Financial Industry Regulatory Authority (FINRA) has undertaken a national study of financial literacy. The results are depressing: just 37% of Americans are financially literate (achieving 4 correct answers or more). How will you fare? Take the quiz below and share your results with us!
Take the Quiz!