How is your financial knowledge? Do you know the basics on things like interest rates, how bond prices work and what inflation means to your money?
Think you could answer five fundamental questions about economics and finance, and get them all right?
Well, a recent study from the FINRA Investor Education Foundation found that only 14% of Americans were able to answer five such questions correctly.
So we thought we would give you a chance to take a crack at the five questions on financial basics:
Questions and answers courtesy of FINRA Investor Education Foundation
Getting on Solid Financial Ground
While as many as 40% of Americans are spending less than they earn in income, according to the study, 18% are spending more and 38% are just breaking even. The study points out that it makes it hard to save when you’re spending more than you make.
Nearly half the country (46%) does not have a “rainy day” or emergency fund. This can be a concern if you’re hit with things like unexpected job loss, auto repairs or medical bills.
In fact, the study finds that 21% of Americans have unpaid medical debt.
Developing a solid financial profile can take time and effort, but it may well pay off in the long run. Consider the following steps to better your situation:
- If you don’t already have one, it may be important learn how to build an emergency fund for the future.
- Be cautious in taking on non-bank loans. When it comes to borrowing money, 26% of Americans have used non-bank borrowing to acquire funds. This can include things like payday loans or using a pawn shop and often come with high interest rates.
- Use a reputable lender that allows you to pay off higher-interest debt in a way that is easy to understand, and ultimately saves you money.