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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.

financial literacy, money, finances, economics, economyMany 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

financial literacy, math literacy, economics, finances, money managementSome 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.

- YouTubewww.youtube.com

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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The truth about millennials and money is complex.

Millennials face different economic challenges than older generations did. I can speak from experience. Pensions feel like unicorns to us, and most of us live with a little monster called student debt on our backs that eats away at our paychecks. As a result, we have different financial priorities and goals, especially when it comes to retirement.


I would probably be less surprised if I came across this scene in a verdant pasture than if I saw a job posting with "pension plan" among the benefits. Painting by Domenichino, via Wikimedia Commons.

Admittedly, many millennials don't think hard about retirement at all. In fact, a recent study found that only 29% of millennials are "actively planning" for retirement ... but the real question is why. Why don't millennials think about retirement? And are we going to be stuck in cubicles until we're in our 80s?

Here's what the facts say.

Things may not be as bleak as they seem. GIF from "The Simpsons."

1. It's true: Millennials are not on track to cover our expenses in retirement.

When millennials think about retirement, they seriously lowball the amount of money they expect to spend, according to the Insured Retirement Institute and the Center for Generational Kinetics. Most millennials expect to spend $36,000 per year, but the average retired person actually goes through more like $47,000.

Another dicey finding from this study? Almost a quarter of millennials think they're going to bankroll their retirement years through the lottery or financial gifts. Yikes.

2. At this rate, many millennials will probably have to delay retirement, which means (in some cases) working until age 75.

A lot of millennials aren't planning to save for retirement until they've paid off their student loan debt, which can take a decade or more.

And it's more than just retirement that's getting delayed. In fact, one-third of recent graduates are saying that they're planning on living at home right after graduation so they can start paying it back. It's a domino effect that delays all sorts of life decisions, like getting married or buying a house.

Photo via 401(K) 2012/Flickr.

3. But more millennials are saving a decent amount of money — and sooner than their parents.

Last year, one survey found that about 56% of millennials are saving at least 5% of their income, which is 6 points higher than the year before! And other research has found that this generation began saving at a median age of 22, which follows a downward trend — reports show Gen X started around 27 and boomers at 35.

4. Plus, Americans in general (not just millennials) are planning to retire later.

In fact, the lack of focus on retirement might have more to do with a switch in mindset than a lack of financial knowledge.Stats show that the number of non-retired people who say they plan to retire after age 65 has grown from 14% in 1995 to 31% in 2009 and 37% in 2015. The expected age at retirement has been creeping up for a while.

Nary a latte in sight. Photo by ITU Pictures/Flickr (altered).

When most millennials entered adulthood, the economy was collapsing, the job market was super bleak, and the housing crisis was in full swing.

So while the majority of millennials appear to be pretty good at saving money when they can, the context is important. In general, millennials tend to avoid investments because the stock market seems like a house of cards, and the job market still feels fairly tenuous.

Millennials do, in fact, have financial priorities. But for most of them, there's a generational switch going on: Quitting work for the last couple decades of their lives isn't at the top of their priority list. Most 20-somethings are taking advantage of 401(k)s when they can, but they're also saving their money for meaningful experiences — like travel — because they'll be satisfied by a "semi-retirement."

You can't do this with an IRA. GIF from "Mad Men."

Since millennials are incredibly committed to finding jobs that they're passionate about, working past age 65 doesn't seem so bad.

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There’s something each of us can do to reduce gun violence: check our retirement funds.

16 years ago, the U.S. government came to a deal with Smith & Wesson. It's up to us to make that happen again.

Once upon a time, a major gun manufacturer stood on the side of gun control.

In March 2000, the Clinton White House announced a historic agreement with manufacturer Smith & Wesson. The agreement hinged on some safety improvements — namely, that new guns would be required to include a locked safety, that a portion of revenue would go toward researching new safety technology, and an agreement that new guns would not be able to accept high-capacity magazines. It was a huge deal, coming less than a year after the Columbine massacre.


President Bill Clinton announces a landmark gun safety agreement with Smith & Wesson, March 17, 2000. Photo by Mark Wilson/Getty Images.

But it didn't last long. To the surprise of Smith & Wesson, the company became an industry pariah, facing a National Rifle Association boycott. Within months, the company pulled out of its agreement with the government and its CEO was forced to resign.

In the years since, the relationship between manufacturers and the government has been rocky, at best. Fearing another NRA-led boycott, manufacturers have kept their distance.

Maybe we, regular people, hold the key to stopping gun violence — not the government.

Of course it would be great if the federal government did something about gun violence — but Congress won't take any meaningful action, and President Obama can only do so much through executive action. It's hard not to feel hopeless, and with every new mass shooting, we ask ourselves whether this will be the one to spark action — knowing deep down that it won't.

There's one bit of leverage we may have: our retirement funds.

President Obama with CNN's Anderson Cooper on Jan. 7, 2015, discussing his most recent executive actions to try to curb gun violence. Photo by Aude Guerrucci-Pool/Getty Images.

Many people don't realize that they likely invest in gun companies through their retirement funds.

Since the Sandy Hook shooting in December 2012, while the Dow Jones has risen by roughly 30% — which is pretty impressive in itself —gun manufacturer Smith & Wesson has seen its stock reach a near unbelievable boost of around 160%. Every time there's a widely-publicized mass shooting, we hear the same thing in the aftermath: gun sales skyrocket. Which makes gun stocks a pretty solid investment.

It makes sense that retirement funds would put their money into these companies, and they do — nearly $2 billion in three of the leading gun companies alone.

Dr. Sheldon Teperman, trauma surgeon. GIF from Unload Your 401(k)/YouTube.

Anti-gun violence advocates are asking people to "Unload" gun stocks from their 401(k)s.

Groups such as States United to Prevent Gun Violence (SUPGV), a coalition of 27 state organizations committed to gun violence prevention, were instrumental in kicking off the Unload Your 401(k) campaign, which they see as a form of direct action.

"It’s a concrete step you can take to make sure you’re not supporting Smith & Wesson and all the assault rifles they’re manufacturing these days," SUPGV communications director Cathie Whittenburg told Upworthy.

"The goal at the manufacturing level is not necessarily to hurt them, but to get them to change their policies." — Cathie Whittenburg

The Unload Your 401(k) campaign was put together back in 2014, and it was meant to put the power in the hands of individuals who wanted to take immediate and direct action to stop funding gun companies. On their website, you can type in the name of the retirement funds you invest in (Vanguard, Fidelity, etc.), and it will let you know whether or not it's likely that fund invests in gun stocks — in which case, you can either try to lobby your employer to choose a new mutual fund or pull out of any employer-set 401(k) and take your investing private.

Eric Milgram, father of two Sandy Hook survivors. GIF from Unload Your 401(k)/YouTube.

Is the Unload Your 401(k) campaign working? That all depends on how you measure success.

“Our biggest success so far has been getting the University of California system to fully divest all funds from gun companies," New Yorkers Against Violence Executive Director Leah Gunn Barrett told Upworthy.

She added that other universities and cities are considering similar action, pointing to the 1980s anti-apartheid movement (in which students pressured their universities to divest stocks from companies doing business in South Africa) as proof that divestment can be an effective strategy.

Guns found at the site of the San Bernardino shooting. Photo by San Bernardino County Sheriff's Department via Getty Images.

It's less about damaging these companies so much as trying to compel them to do the right thing.

"The goal at the manufacturing level is not necessarily to hurt them, but to get them to change their policies," Whittenburg says, referencing Smith & Wesson's agreement with the Clinton administration. "They did it once. They can do it again if they want to."

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2 guys in a room start arguing. It lasts for 90 seconds. It's passive-aggressive and funny. Fin.

Is giving big bankers a hard time getting kinda old? (No. No, it is not.)

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Calvert Foundation Ours to Own

These two guys get to talking about investments...

Hmmm. That's a really good question.


We know the stock market can be unreliable...

Don't bury your money in your backyard. Click here instead.

I hear ya.

Did you know there's another option?

Yes! That's a good point! Real stuff is great!

You can invest a lot of money in something big and intangible like the stock market ... or you can invest in real things, like local businesses and organizations that help your community instead. I don't know about you, but I'd rather not have my investment money being used to fuel "Wolf of Wall Street" shenanigans.

It's really neat — OK, more than neat! — that you can invest in small businesses and support your community with such a small amount of money. Seems like a win-win for the little guy (or gal) if you ask me.

Wait. Am I missing something?

Scroll up. It's all there for you.

Still confused? Check out the video here to find out more:

Maybe spread the good word with the guys and gals you know?