It’s Financial Literacy month! In this blog you’ll find a link to a 17 question financial literacy quiz. Annamarie Lusardi, the Academic Director of the Global Financial Literacy Excellence Center at George Washington University and one of the authors of the quiz and academic paper “Five Steps to Planning Success,” says that answering 11 out of 17 questions accurately indicates financial literacy. They made an important observation: those surveyed who identified as savers had higher scores on the quiz than non-savers.
The paper defines five concepts as critical to good financial behavior and sound financial planning. They’ve even created a YouTube video for each concept! The video on compound interest, “A Wedding Gift and Compound Interest” resonated with me. How many couples would benefit from spending less on their wedding and, instead, putting some away for their future?
Compound Interest – A Wedding Gift and Compound Interest
Inflation – Inflation and the Plain Shirt
Risk diversification – Don’t Put All Your Eggs in One Basket
Tax treatment of retirement savings vehicles – Take Advantage of Tax-Free Assets
Employer matches of defined contribution savings plans – Take Advantage of Employer Matches
Try your hand at the quiz – the ideas are basic but powerful.