A quiz reveals some holes in Americans' financial literacy.
Financial literacy is always important, but in uncertain economic times, it's vital. The financial world is complex and multi-faceted, and there's no exact gauge of what you need to know in order to be considered informed. There are, however, some financial fundamentals that everyone needs to understand on a basic level in order to avoid making catastrophic money decisions and to be able to follow what's happening with the economy on a larger scale.
Unfortunately, many Americans have never taken an economics class and aren't well-versed in things like inflation, investments, interest rates, and other economic realities. To be fair, economics can be confusing even when you try to learn, but without understanding some basic concepts, it can make a huge difference in your financial wellbeing.
Many Americans need to increase their financial literacy.Photo credit: Canva
The non-profit FINRA Investor Education Foundation surveyed 25,500 adult Americans and asked them to take a seven-question financial knowledge quiz to test their financial literacy. The results were a bit concerning, as only a small fraction of quiz-takers answered all seven questions correctly.
Here are the questions they asked:
1. Suppose you have $100 in a savings account earning 2 percent interest a year. After five years, how much would you have?
More than $102
Exactly $102
Less than $102
Don't Know
2. 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?
3. If interest rates rise, what will typically happen to bond prices? Rise, fall, stay the same, or is there no relationship?
4.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.
5. True or false: Buying a single company's stock usually provides a safer return than a stock mutual fund.
6. Suppose you owe $1,000 on a loan and the interest rate you are charged is 20% per year compounded annually. If you didn't pay anything off, at this interest rate, how many years would it take for the amount you owe to double?
a) 0 to 2 years
b) 2 to 4 years
c) 5 to 9 years
d) 10 or more years
e) Don't know
Some financial literacy is just math literacy—understanding percentages and probabilities. Photo credit: Canva
7. Which of the following indicates the highest probability of getting a particular disease?
a) There is a one-in-twenty chance of getting the disease
b) 2% of the population will get the disease
c) 25 out of every 1,000 people will get the disease
d) Don't know
"Don't know" was an option for each question, and the average correct score across the Americans who took the quiz was 3.3 out of 7. Nationwide, 27% of people who took the quiz got the right answers on at least five of the questions, and only 4% aced all seven questions.
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Which states fared the best and worst? Here are the 10 top states by percentage of survey respondents that correctly answered five or more of the quiz question:
1. Minnesota (34.78%)
2. Wisconsin (34.46%)
3. District of Columbia (34.41%)
4. Colorado (33.89%)
5. Wyoming (33.85%)
6. Washington (32.54%)
7. Vermont (32.34%)
8. North Dakota (32.00%)
9. Oregon (31.86%)
10 Kansas (31.44%)
And here are the bottom 5 by the same metric:
New Mexico (23.2%)
West Virginia (21.4%)
Alabama (20.2%)
Mississippi (19.2%)
Louisiana (18.1%)
One piece of good news: Americans' understanding of inflation has increased significantly since the last time FINRA did a similar survey in 2021. (Or maybe that's not such good news, as it's likely a better understanding that came from experiencing an inflation crisis, but learning is learning.)
"Overall, the findings show that knowledge of everyday financial concepts remains a challenge for many Americans. The wide disparities in financial knowledge across states demonstrate that more work is required to empower all Americans with the skills and tools to make informed financial decisions and safeguard their investments,” said Gerri Walsh, President of the FINRA Foundation. "The increase in the number of respondents who correctly answered the question about the impact of inflation on savings is an encouraging sign, likely reflecting the impact of lived experience as well as increased focus on the topic. However, continued efforts are needed to ensure all Americans fully understand the effects of economic factors on their personal finances."
Not only does a lack of financial knowledge have the potential to impact people's personal finances, such as getting into credit card debt trouble or choosing unwise investments, but not understanding how things like inflation and the relationship between interest rates and investment markets can lead people to vote for politicians with questionable economic policies. How can you believe a politician will be good for the economy if you don't understand what factors contribute to keeping the economy stable and strong?
You can take the quiz yourself here and see how your knowledge compares.
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An Irish woman went to the doctor for a routine eye exam. She left with bright neon green eyes.
It's not easy seeing green.
Did she get superpowers?
Going to the eye doctor can be a hassle and a pain. It's not just the routine issues and inconveniences that come along when making a doctor appointment, but sometimes the various devices being used to check your eyes' health feel invasive and uncomfortable. But at least at the end of the appointment, most of us don't look like we're turning into The Incredible Hulk. That wasn't the case for one Irish woman.
Photographer Margerita B. Wargola was just going in for a routine eye exam at the hospital but ended up leaving with her eyes a shocking, bright neon green.
At the doctor's office, the nurse practitioner was prepping Wargola for a test with a machine that Wargola had experienced before. Before the test started, Wargola presumed the nurse had dropped some saline into her eyes, as they were feeling dry. After she blinked, everything went yellow.
Wargola and the nurse initially panicked. Neither knew what was going on as Wargola suddenly had yellow vision and radioactive-looking green eyes. After the initial shock, both realized the issue: the nurse forgot to ask Wargola to remove her contact lenses before putting contrast drops in her eyes for the exam. Wargola and the nurse quickly removed the lenses from her eyes and washed them thoroughly with saline. Fortunately, Wargola's eyes were unharmed. Unfortunately, her contacts were permanently stained and she didn't bring a spare pair.
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Since she has poor vision, Wargola was forced to drive herself home after the eye exam wearing the neon-green contact lenses that make her look like a member of the Green Lantern Corps. She couldn't help but laugh at her predicament and recorded a video explaining it all on social media. Since then, her video has sparked a couple Reddit threads and collected a bunch of comments on Instagram:
“But the REAL question is: do you now have X-Ray vision?”
“You can just say you're a superhero.”
“I would make a few stops on the way home just to freak some people out!”
“I would have lived it up! Grab a coffee, do grocery shopping, walk around a shopping center.”
“This one would pair well with that girl who ate something with turmeric with her invisalign on and walked around Paris smiling at people with seemingly BRIGHT YELLOW TEETH.”
“I would save those for fancy special occasions! WOW!”
“Every time I'd stop I'd turn slowly and stare at the person in the car next to me.”
“Keep them. Tell people what to do. They’ll do your bidding.”
In a follow-up Instagram video, Wargola showed her followers that she was safe at home with normal eyes, showing that the damaged contact lenses were so stained that they turned the saline solution in her contacts case into a bright Gatorade yellow. She wasn't mad at the nurse and, in fact, plans on keeping the lenses to wear on St. Patrick's Day or some other special occasion.
While no harm was done and a good laugh was had, it's still best for doctors, nurses, and patients alike to double-check and ask or tell if contact lenses are being worn before each eye test. If not, there might be more than ultra-green eyes to worry about.