Financial Capability Quiz

Check out HelloWallet’s new Financial Capability Quiz, featured in the Huffington Post! Answer a few questions, tally up your score and find out whether you’re well protected against losing money unnecessarily.

Financial Capability Quiz

Questions
1. Do you usually only think about money when you don’t have enough of it?
2. Do you know the interest rate and monthly fee (if applicable) on your credit card?
3. Do you have rainy day or emergency savings?
4. Do you know how much you spent on groceries last month?
5. Is more than two months of your annual income in checking accounts?
6. Do you regularly trade stocks?
7. Do you know how much money you need to retire?
8. Are credit scores used by employers to evaluate job prospects?
9. Do you tend to compare rates at multiple financial institutions when you buy financial products (e.g., checking accounts or credit cards)?
10. Do you rely on “free” financial services online to find bank products?

Answer Scoring Guide
Question 1: Yes = 0; No = 1
Question 2: Yes = 1; No = 0
Question 3: Yes = 1; No = 0
Question 4: Yes = 1; No = 0
Question 5: Yes = 0; No = 1
Question 6: Yes = 0; No = 1
Question 7: Yes = 1; No = 1
Question 8: Yes = 1; No = 0
Question 9: Yes = 1; No = 0
Question 10: Yes = 0; No = 1

Evaluation
If you scored 7 or higher, congratulations! You are likely in control of your money and well protected from tricks and traps. If you scored 3-6, be careful! You may be overpaying banks and other financial institutions for financial products and unnecessarily losing money. If you scored less than 3, blow $150 tomorrow and talk to an independent, fee-only financial advisor. It will save you a lot of money over the long-term.

Answer Explanations

1. Do you usually only think about money when you don’t have enough of it?
We find that people that think proactively about how to use their money to get ahead are much more likely to succeed over the long term and avoid getting ripped off.

2. Do you know the interest rate on your credit card?
This may seem petty, but credit card companies can vary interest rates at their discretion and frequently do. Staying on top of these rates can save you a lot of money over the long term.

3. Do you have rainy day or emergency savings?
Behind divorce, one of the most powerful predictors of financial crisis is the lack of rainy day savings. Rich and poor alike suffer when unexpected expenses arise and force people to turn to their retirement savings, credit cards, or, worse, payday lenders. It’s much better to prepare for the unexpected ahead of time.

4. Do you know how much you spent on groceries last month?
It may seem petty, but this is an excellent proxy for how in control you are of your money.

5. Is more than two months of your annual income in checking accounts?
Over 30 million U.S. households store more than two months of their annual income in their checking account, unnecessarily losing billions of dollars in potential interest. Don’t be a statistic!

6. Do you regularly trade stocks?
Most people that regularly trade stocks lose money relative to the indexes. It’s a myth that active traders tend to be more successful than passive investors.

7. Do you know how much money you need to retire?
It’s a basic question, but knowing this information is fundamental to your long-term financial health.

8. Are credit scores used by employers to evaluate job prospects?
Credit scores are quickly becoming a passport to economic mobility. They are used by an increasing number of industries to evaluate you, including a growing number of employers.

9. Do you tend to compare rates at multiple financial institutions when you buy financial products (e.g., checking accounts or credit cards)?
Shopping around for products before you buy them is an absolutely essential step you need to take to avoid paying unnecessarily high fees

10. Do you rely on “free” financial services online to find bank products?
Most free financial service sites online are free because they are paid by banks to peddle a small number of bank products, often carrying less attractive rates compared to what you can find by shopping around on your own or by using for-fee sites.