HomeNewsMost Americans Fail This Personal Finance Quiz. How Would You Do?

Most Americans Fail This Personal Finance Quiz. How Would You Do?


Every year since 2017, the folks at the TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) at the George Washington University School of Business have quizzed Americans about personal finance topics, and only about half of the questions have been answered correctly each year. In the 2023 report, only 48% of questions were answered correctly overall.

A little digging online will turn up lots of personal finance quizzes you can take — and many have dismal passing rates for the overall population. Here’s a look at some such questions. See if you would get them right!

Someone is looking up in thought, with question marks behind her.

Image source: Getty Images.

The TIAA Institute and the Global Financial Literacy Excellence Center quiz

Jose owes $1,000 on a loan that has an interest rate of 20% per year compounded annually. If he makes no payments on the loan, at this interest rate, how many years will it take for the amount he owes to double?

A. More than 10 years
B. 5 to 10 years
C. Less than 5 years (edited for length)

This question trips up a lot of people. A quick way to address it is to employ the Rule of 72. This shows how long it will take to double your money at a certain growth rate by having you divide 72 by the growth rate or the number of years.

Divide 72 by 20, and you’ll get 3.6. So it will only take about 3 1/2 years for his debt to double. Keep this lesson in mind when it comes to credit cards, as many of them charge 20% or more annually in interest.

You can also apply this compounding phenomenon to your investments. This is how they might grow and double over time:

Growing at 8% for

$7,500 Invested Annually

$15,000 Invested Annually

5 years



10 years



15 years



20 years



25 years



30 years



35 years



40 years



Chart and calculations by author.

The FINRA quiz

The FINRA Financial Industry Regulatory Authority offers a quick seven-question quiz, with a national average of 3.2 questions answered correctly — less than half. Here are two sample questions from it:

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?

Do you appreciate the effect of inflation on your finances? Over a period of 25 to 30 years, typical inflation rates will shrink the purchasing power of your money by about half. That can have a huge effect on your retirement savings in your later years.

A mathematical way to see the effect is to subtract your expected inflation rate from your expected returns. So if you’re aiming for average annual returns of at least 8% over a period of time and you expect inflation to average around 3%, you’d subtract 3 from 8, getting 5. That means you can expect an inflation-adjusted average “real” return of 5%.

You can tweak your investments to anticipate inflation, too, such as by focusing on real estate investment trusts (REITs), I-bonds, and stocks with pricing power.

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

What do you think about this question? The answer is false — because a stock mutual fund will presumably be diversified, spreading its dollars across a range of securities.

Owning just a single company’s stock leaves you underdiversified, with too many eggs in one basket. If that company implodes, you’ll be in hot water. (And many well-regarded companies have fallen on very hard times in the past — think, for example, about Eastman Kodak, Woolworth’s, Blockbuster, and the Pan American airline.)

The value of financial literacy

Getting back to the TIAA Institute and the Global Financial Literacy Excellence Center quiz, it found about a quarter of respondents were unable to answer more than a quarter of the questions correctly. That group, exhibiting a low level of financial literacy, also exhibited other troubling characteristics. For example, when compared to those with a high level of financial literacy, they were:

  • more than four times as likely to report having difficulty making ends meet (44% vs. 10%)
  • nearly three times as likely to be constrained by debt (34% vs. 12%)
  • more than four times as likely to not have enough emergency savings to cover one month of living expenses (56% vs. 13%)

Clearly, financial literacy matters a lot. The more you understand how money works — how assets grow and how debt can compound, for example — the smarter decisions you can make regarding your finances. You might start by reading articles at Fool.com or our sister site TheAscent.com. There are plenty of terrific financial books out there, too.




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