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Quiz: What’s Your Financial IQ?

Financial literacy is the ability to understand and apply financial concepts in your everyday life. The more you know, the better the likelihood you’ll be able to effectively manage your money. Unlike a traditional IQ (intelligence quotient), which measures your natural reasoning and problem-solving abilities, a financial IQ measures your current financial knowledge in categories such as budgeting, saving, borrowing, credit and retirement planning.

If you’re not feeling confident in your financial IQ score, don’t worry! You’re not alone. While only about 1 in 10 people admit a lack of personal finance knowledge, 78% of adults say they would benefit from more financial advice and information, according to a 2020 National Foundation for Consumer Credit (NFCC) survey.1

The good news is that your financial IQ isn’t permanent — you can raise your score just by learning more about money matters. Take the quiz below to see where your financial IQ is now:

What’s My Financial IQ?

1. What’s the maximum recommended percentage of your income that should go toward monthly housing payments?

  • 15%
  • 20%
  • 28%
  • 40%

2. True or False: Net income is the amount of money you receive after things like taxes, retirement and health insurance premiums are taken out of your paycheck.

  • True
  • False

3. According to the Equifax credit reporting bureau, a score of what number and above is considered very good or excellent?

  • 580
  • 665
  • 700
  • 740

4. Which of the following statements about credit scores is NOT true?

  • They can affect credit card APR.
  • A low credit score can affect your ability to rent or purchase a home.
  • Checking your credit score periodically is bad
  • They can raise or lower your car insurance premiums.

5. Which of the following factors can affect your credit score?

  • Payment history
  • Length of your credit history
  • Total debt
  • All of the above

6. What is the 50/30/20 rule of budgeting?

  • Save 50% of your net pay, use 30% to pay bills and invest 20%.
  • Spend 50% of your net pay on needs, 30% on wants and 20% on savings or debt reduction.
  • Don’t budget for 50% of your expenses. Of the other 50%, use 30% on rent or mortgage payments and 20% for other bills.
  • 50% of the time, your budget will be wrong, 30% it will be partially incorrect and 20% of the time you will stick to your budget.

7. When you keep your money with an NCUA-insured credit union, up to what amount are you covered?

  • $100,000
  • $250,000
  • $500,000
  • $750,000

8. Imagine you keep $1,000 in a savings account that earns 2% per year. After 5 years you will have:

  • Less than $1,000
  • Exactly $1,020
  • Exactly $1,100
  • Slightly more than $1,100

9. Approximately what percent of their working salary should most people aim to have after retirement?1

  • 30%
  • 50%
  • 80%
  • 110%

10. What is a credit card APR?

  • The amount the credit card company charges you in interest per year.
  • The annual fee for having a credit card.
  • The amount of rewards the credit card company will pay you.
  • The fees charged for a late credit card payment.

Your financial IQ level is ADVANCED. You have an impressive understanding of credit, budgeting and retirement planning. But there’s no reason to stop there! Here are some action steps you can take to put your money smarts to use.

Your financial IQ level is MODERATE. You understand the basics of credit, budgeting and retirement planning, but you still have some more to learn. Here are some action steps you can take to take your money smarts to the next level:

Your financial IQ level is BEGINNER. You’ve got some of the basics down, but there are a few tools you don’t have in your belt yet. Here are some steps you can take to boost your knowledge and easily manage your finances:

A Free Checking account could help you reach your money goals faster!

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1https://www.nfcc.org/resources/client-impact-and-research/2020-consumer-financial-literacy-survey/
2https://crr.bc.edu/wp-content/uploads/2011/11/IB_11-13-508.pdf