Are You Money Smart?

Money Smart Week

Click here to find out if you are money smart. This quiz includes questions from FINRA's National Financial Capability Study.

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Money Smart Week

1) Which activity can pose the greatest threat to your wallet?

Getting a latte at Starbucks every day
Borrowing money for a car you need to get to work
Spending without a plan

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Money Smart Week

Spending without a plan can put you in a world of hurt. Not correctly managing your finances can cause you to overdraw your accounts, go over your credit limit, and rack up excessive amounts of debt.

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Money Smart Week

2) If you apply for a store credit card, how do they decide if they approve you—or turn you down—on the spot?

They make sure you look good in their clothes
They check out your credit score
They make sure you have spent a set amount of money at their store

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Money Smart Week

Many stores are set up to access your credit score right at the register. If you have a high score, you are usually given a credit line right on the spot. If you have a low score, you will be denied a credit line.

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Money Smart Week

3) What is considered a good FICO credit score?

In the mid to high 500's
In the mid to high 600's
In the mid to high 700's

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Money Smart Week

According to myfico.com, you want a credit score in the mid to high 700s in order to qualify for the best interest rates. The national average score is around 690.

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Money Smart Week

4) What does a phisher want?

Your personal and financial information
A romantic date
Your academic records

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Money Smart Week

Phishers are email scam artists who want to steal your confidential personal information. They use the information to make purchases or borrow money in your name, or access your bank account.

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Money Smart Week

5) If someone steals your credit card and uses it, how much could you end up owing?

$50
$500
The total bill

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Money Smart Week

The Truth in Lending law limits your liability to $50 if your credit card is stolen. On the other hand, you could owe $500 if thieves get their hands on your debit card.

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Money Smart Week

6) What's the main difference between a Roth Individual Retirement Account (IRA) and Traditional IRA?

Roth IRAs include stocks and Traditional IRAs do not
With Roth IRAs, you pay taxes before you put the money in the account - With Traditional IRAs, you pay taxes when you withdraw the money in retirement
Both Roth IRAs and Traditional IRAs are taxed

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Money Smart Week

With Roth IRAs, you pay taxes before you put the money in the account. With Traditional IRAs, you pay taxes when you withdraw the money in retirement. Both types of accounts can include stocks. Funds in both types of accounts grow tax-free.

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Money Smart Week

7) 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 than it does today
Exactly the same
Less than today

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Money Smart Week

Less than today. Watch out for inflation!

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Money Smart Week

8) How much money should you keep in your emergency fund?

3% of your current salary
The equivalent of 3 to 6 months worth of living expenses
Nothing—just use your credit card in case of emergencies

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Money Smart Week

Experts recommend being prepared for unexpected expenses and life events by saving up at least 3 to 6 months worth of living expenses for emergencies.

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Money Smart Week

9) How can you tell if your identity has been stolen?

You receive bills for things you never purchased
You receive lots of spam email
You receive mail addressed to someone else

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Money Smart Week

Receiving bills or statements for things you never purchased or credit cards for which you never applied may be a sign of identity theft.

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Money Smart Week

10) If you're trying to build good credit, what is the most important thing you can do?

Throw away your credit cards and don’t take out any loans
Maintain a balance on your credit cards and pay the minimum every month
Pay your bills on time

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Money Smart Week

Paying your bills on time, including your rent, student loans, and credit cards, is the single most important thing you can do to establish good credit.

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Money Smart Week

11) Your credit score can affect your ability to:

Lease an apartment
Get a good rate on auto insurance
Both of the above

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Money Smart Week

Your credit score can affect your ability to get a loan, an apartment, or even a job. It can also affect the interest rate you pay to borrow or the premiums you pay for insurance.

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Money Smart Week

12) 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

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Money Smart Week

Fall. Bond prices and interest rates move in opposite directions.

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Money Smart Week

13) 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


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Money Smart Week

True. The shorter the loan term, the less interest you pay.

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Money Smart Week

14) According to the US Department of Labor, what percentage of your preretirement yearly income do you need to save to maintain your standard of living when you stop working?

70%
60%
50%

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Money Smart Week

Retirement is expensive. Experts estimate that you will need about 70 percent of your preretirement income – lower earners, 90 percent or more – to maintain your standard of living when you stop working.

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Money Smart Week

15) True or false: Buying a single company's stock usually provides a safer return than a stock mutual fund.

True
False


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Money Smart Week

False. Diversification means reducing risk by investing in a variety of assets. Mutual funds allow you to spread the risk of losing money among different investment tools.

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Money Smart Week

16) What are your odds of winning a six-number lottery?

1 in a million
1 in 5 million
1 in 10 million

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Money Smart Week

Your odds of winning the lottery are so low that many mathematicians call the lottery a tax for people who are bad a math.

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Money Smart Week

17) According to the US Department of Labor, how much are social security benefits?

Equal to about 40 percent of what you earned before retirement
Equal to about 50 percent of what you earned before retirement
Equal to about 60 percent of what you earned before retirement

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Money Smart Week

Social Security pays benefits that are on average equal to about 40 percent of what you earned before retirement. Another reason to save as much as you can for retirement. Remember, you need about 70% of what you earned before retirement to maintain your standard of living.

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Money Smart Week

18) How much money does the average American save each year by brown bagging their lunch?

$500
$1,000
$1,500

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Money Smart Week

$1,500. Be good to yourself. Brown bagging is healthier and cheaper than grabbing fast food.

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Money Smart Week

19) People in which of the following careers typically can qualify for student loan forgiveness?

Teachers
Firefighters
Both of the above

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Money Smart Week

Both of the above. Public service workers can qualify for the Public Service Loan Forgiveness program. Under this program, borrowers make 120 payments on their student loans, then their remaining balance is dropped. People who work for the government or for non-profit organizations can qualify.

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Money Smart Week

20) What can happen if you fill out your W4 incorrectly?

The IRS will hunt you down
You can end up withholding too much or prepaying too little tax
Nothing, your tax accountant can figure it out

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Money Smart Week

If you fill out your W4 incorrectly, you could end up having too little, or too much, tax withheld. Too little, and you’ll owe money when you file your taxes. Too much, and you've given the IRS an interest-free loan with money that could have been earning you money in an investment account.

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FINAL RESULTS

0-10 Correct

You need to expand your knowledge of financial matters.

Return to the Money Smart Nebraska website.

FINAL RESULTS

10-17 Correct

You are starting on the path to financial success, but you lack some important financial knowledge.

Return to the Money Smart Nebraska website.

FINAL RESULTS

17-20 Correct

Congratulations! You are on the path to financial success.

Return to the Money Smart Nebraska website.