Feb 152015
 

A new study by the University of Pennsylvania’s Wharton School found that adults in many countries make money decisions with surprisingly little financial knowledge. Researchers asked people in 18 countries THREE simple financial literacy questions about interest rates, inflation and investing.

When Americans over 50 years old were asked these 3 questions, only 50% could answer the first two questions correctly. Furthermore, just 33% knew the correct answer to all three questions. “Even well-educated people are not necessarily savvy about money,” according to the report. Among people with post-graduate degrees, 64% were able to ace the quiz. That’s better than the average, 🙂 but still less than my expectations.

Do you think you are smarter than most Americans? According to the report, answering each additional question correctly is associated with a 3% to 4% greater probability of planning for retirement.

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The Wharton study found that men (38%) were more likely than women (23%) to know the answer to all three questions. The guys also claimed to feel more confident about their financial knowledge, even when they answered incorrectly. The ladies, on the other hand, were more likely to admit that they didn’t know the answer to a question. Women are so modest. 😳

So how many did you get right on your first try? Feel free to spoil the answers below in the comments section if you think you know the correct answers. 😉 I’ll verify by tomorrow. Financially literate individuals save more, earn more on their investments, and manage their money better. So if you got 3 out of 3 correct then congrats! Your financial future is looking bright. 😀 Otherwise, keep brushing up on your personal finance knowledge. 🙂

Researchers of the report say that “more knowledgeable individuals invest in more sophisticated assets, suggesting that they can expect to earn higher returns on their retirement saving accounts with lower non-systematic risk,” While it’s not important for everyone to have an economics degree, it does help to acquire some basic financial knowledge to help people make decisions about their future. 🙂

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Random Useless Fact:

The quokka is a small marsupial that can be found in Australia. They are herbivorous and mainly nocturnal like their relatives the kangaroo and wallaby. Quokkas are best known for being the happiest animals in the world because they appear to be constantly smiling.

15-02-smiling-happy-quokka-austrailia

 

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RICARDOMy Road to Wealth and FreedomheikszLiquid IndependenceKapitalust Recent comment authors
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save. spend. splurge.
Guest

For me, they were easy questions… I’m more interested in that adorable marsupial!!!!!!!

Lynx
Guest

I got 3/3. Those quokka are adorable 🙂

Asset Grinder
Guest

Pretty easy questions but I can see how many would struggle with this. Financial literacy is a major problem these days with people. It is simply not taught enough. It should be is the school curriculum.

PC
Guest

Yay, I scored 3/3. I am financially literate!

Lars
Guest

Got 3/3, it is always interesting to see where others struggle. Education is the key, but where to start if whole families live on social security for generations ( speaking of the super duper social security system in Germany in which low educated people do their best if they are not working).
Well I am doing my best to use my knowledge and grow my passive income – thanks mom!

Anne @ Money Propeller
Guest

It scares me that the answer rate was so poor, those aren’t exactly hard question, but they do require a tiny bit of knowledge about money. Nice work incorporating a quiz 🙂

Vivianne
Guest

3/3 but they are very simple. Next time bring in the series -7 questions liquid.

Tawcan
Guest

Phew 3/3 for me. Thees are pretty easy questions, just to show why it’s so important to include some sort of personal finance courses in elementary and high school.

Gabriel
Guest
Gabriel

I could understand how people could miss the first question asked if the multiple choice section would give 110$, more or less… because people could easily forget compound interest, but 102$…. how can someone miss that?

Gen Y Finance Guy
Guest

I got all 3 right. But I can see how so many could get them wrong. We have a huge issue of financial literacy in the US. It just reiterates that people need bloggers that demystify finance.

Alright everyone, we have a lot of work, teaching, and inspiring to do.

So lets get back to work.

The Asian Pear
Guest

YAY! I got all 3 right. I must admit… I sweated it out a bit. I am not good at math at all… EEK! Percentages. >_<

Comment on Random Fact – I hope to see a Quokka when I'm in Australia. D'awhh. SO cute.

Kapitalust
Guest

How do people who can’t answer those questions function in the real world? Oh wait, about that level of debt and little assets most people carry in life…

heiksz
Guest

3/3 jipee:)

My Road to Wealth and Freedom
Guest

3/3 for me. It’s a shame that many people don’t take the initiative to learn even the basics of finance and money management. The principles are simple and straightforward and they should certainly be taught in high school!

RICARDO
Guest
RICARDO

@ LIQ
Don’t worry, that day is coming whether or not we are financially literate or not. I am sure the gov’s wil find a way to claw back some or our dollars.

Ricardo

RICARDO
Guest
RICARDO

I am wondering, after question three, if the mutual fund industry did not contribute some funding to this quizz????

RICARDO