Financial Wellness
Test Your Financial Literacy with This Quiz
Financial literacy matters more than ever. But let's be honest— plenty of us admit we don't know enough about managing money as we'd like. Even if you think you've figured it out, you might want to think again. Recent surveys show that most Americans aren't as financially literate as they believe.
The FINRA Foundation recently ran another round of its National Financial Capability Study—an ongoing effort to see how well Americans understand and manage their money. These studies help track financial literacy trends across the country. According to USA Today, the last one was done in 2021. Now, FINRA is back with fresh results from 2024.
As part of the study, FINRA gave a Financial Knowledge Quiz to 25,500 adults nationwide. The quiz was short—just seven questions—but still, most Americans didn't pass. The results highlight a big gap in basic financial know-how.
Suppose you have $100 in a savings account earning 2 percent interest a year. After five years, how much would you have?
Imagine that the interest rate on your savings account is 1 percent a year and inflation is 2 percent a year. After one year, would the money in the account buy more than it does today, exactly the same or less than today?
If interest rates rise, what will typically happen to bond prices? Rise, fall, stay the same, or is there no relationship?
True or false: A 15-year mortgage typically requires higher monthly payments than a 30-year mortgage but the total interest over the life of the loan will be less.
True or false: Buying a single company's stock usually provides a safer return than a stock mutual fund.
Suppose you owe $1,000 on a loan and the interest rate you are charged is 20% per year compounded annually. If you didn't pay anything off, at this interest rate, how many years would it take for the amount you owe to double?
Which of the following indicates the highest probability of getting a particular disease?
The FINRA Foundation recently ran another round of its National Financial Capability Study—an ongoing effort to see how well Americans understand and manage their money. These studies help track financial literacy trends across the country. According to USA Today, the last one was done in 2021. Now, FINRA is back with fresh results from 2024.
As part of the study, FINRA gave a Financial Knowledge Quiz to 25,500 adults nationwide. The quiz was short—just seven questions—but still, most Americans didn't pass. The results highlight a big gap in basic financial know-how.
How would you score?
Think you have strong financial habits? Challenge yourself with the same FINRA quiz below.Suppose you have $100 in a savings account earning 2 percent interest a year. After five years, how much would you have?
- More than $102
- Exactly $102
- Less than $102
- Don't Know
Answer: A. You'll have more than $102 at the end of five years because your interest will compound over time. In other words, you earn interest on the money you save and on the interest your savings earned in prior years. Here's how the math works. A savings account with $100 and a 2 percent annual interest rate would earn $2 in interest for an ending balance of $102 by the end of the first year. Applying the same 2 percent interest rate, the $102 would earn $2.04 in the second year for an ending balance of $104.04 at the end of that year. Continuing in this same pattern, the savings account would grow to $110.41 by the end of the fifth year.
Imagine that the interest rate on your savings account is 1 percent a year and inflation is 2 percent a year. After one year, would the money in the account buy more than it does today, exactly the same or less than today?
- More
- Same
- Less
- Don't Know
Answer: C. The reason you have less is inflation. Inflation is the rate at which the price of goods and services rises. If the annual inflation rate is 2 percent but the savings account only earns 1 percent, the cost of goods and services has outpaced the buying power of the money in the savings account that year. Put another way, your buying power has not kept up with inflation.
If interest rates rise, what will typically happen to bond prices? Rise, fall, stay the same, or is there no relationship?
- Rise
- Fall
- Stay the Same
- No Relationship
- Don't Know
Answer: B. When interest rates rise, bond prices fall. And when interest rates fall, bond prices rise. This is because as interest rates go up, newer bonds come to market paying higher interest yields than older bonds already in the hands of investors, making the older bonds worth less.
True or false: A 15-year mortgage typically requires higher monthly payments than a 30-year mortgage but the total interest over the life of the loan will be less.
- True
- False
- Don't Know
Answer: A. Assuming the same interest rate for both loans, you will pay less in interest over the life of a 15-year loan than you would with a 30-year loan because you repay the principal at a faster rate. This also explains why the monthly payment for a 15-year loan is higher. Let's say you get a 30-year mortgage at 6 percent on a $150,000 home. You will pay $899 a month in principal and interest charges. Over 30 years, you will pay $173,757 in interest alone. But a 15-year mortgage at the same rate will cost you less. You will pay $1,266 each month but only $77,841 in total interest—nearly $100,000 less.
True or false: Buying a single company's stock usually provides a safer return than a stock mutual fund.
- True
- False
- Don't Know
Answer: B. In general, investing in a stock mutual fund is less risky than investing in a single stock because mutual funds offer a way to diversify. Diversification means spreading your risk by spreading your investments. With a single stock, all your eggs are in one basket. If the price falls when you sell, you lose money. With a mutual fund that invests in the stocks of dozens (or even hundreds) of companies, you lower the chances that a price decline for any single stock will impact your return. Diversification generally may result in a more consistent performance in different market conditions.
Suppose you owe $1,000 on a loan and the interest rate you are charged is 20% per year compounded annually. If you didn't pay anything off, at this interest rate, how many years would it take for the amount you owe to double?
- Less than 2 years
- 2 to 4 years
- 5 to 9 years
- 10 or more years
Answer: B. If someone did not understand how compound interest operates, they might conclude that borrowing at 20 percent per year would lead to doubling in five years. However, someone who knew about interest on interest would understand that the answer would be somewhat less than five years. Further, someone who knows the 'rule of 72' heuristic would know that it would be about 3.6 years, which makes the correct answer "2 to 4 years." In finance, the rule of 72 is a method for estimating an investment's doubling time. The rule number (i.e., 72) is divided by the interest percentage per period to obtain the approximate number of periods (usually years) required for doubling. The other responses reflect a misunderstanding of the concept of interest accrual.
Which of the following indicates the highest probability of getting a particular disease?
- There is a one-in-twenty chance of getting the disease
- 2% of the population will get the disease
- 25 out of every 1,000 people will get the disease
Answer: A. The highest probability of getting a disease would be a one-in-twenty chance. The first step to answering this question is to convert all the answer choices so that they are in the same format. A one-in-twenty chance is the same as 1/20 or .05 (5%). Similarly, a probability of 25 out of every 1,000 is the same as 25/1000 or .025 (2.5%). Now that all answer choices are in the same format (5%, 2.5%, and 2%), it becomes clear that the largest percentage – and greatest probability of contracting the disease – is 5% or a one-in-twenty chance. From a financial knowledge perspective, understanding probabilities can help evaluate the potential outcomes and risks associated with financial decisions more effectively.
Extra insights from the data
Here are a few more findings from the preliminary results. The rest of the study, which dives deeper into Americans' financial situations and preferences, is coming out in July 2025.State-by-State findings
There are some big differences depending on where you live. Minnesota just edged out Wisconsin for the top spot, with more than one in three residents passing the quiz. Meanwhile, fewer than 20% of people in Mississippi and Louisiana passed.Understanding inflation is improving
More people got the question about inflation right this time, which is a step in the right direction.It starts with saving
According to FINRA's past studies, people who do well on these quizzes tend to be better at managing their money—especially when it comes to saving, spending, and handling debt.Gaps in financial knowledge remain
"Overall, the findings show that knowledge of everyday financial concepts remains a challenge for many Americans. The wide disparities in financial knowledge across states demonstrate that more work is required to empower all Americans with the skills and tools to make informed financial decisions and safeguard their investments," said Gerri Walsh, President of the FINRA Foundation.Resources: USA Today, FINRA Foundation, Upworthy
