|It looks like they are eating broccolli - great meal!|
The questions come from an article in the Chicago Tribune by Gregory Karp of Spending Smart, Quiz: Your money literacy, presented online at the Baltimore Sun. After discussing the questions, you should read Mr. Karp's answers.
1.Would you rather have $1,000 or a penny doubled every day for a month?
2. Do your credit scores rise when you get a higher-paying job?
3. Is a household budget meant to restrict your spending?
4. Should a child's weekly allowance be tied to household chores?
5. Should I pay off highest interest rate debt first?
6. What is the only official site for getting your credit report?
7. If a thief steals your credit card and charges $1,000, you're responsible for how much?
8. Which investment is likely to provide the highest returns over time: stocks, bonds or certificates of deposit?
9. True or false: You must buy eyeglasses and contact lenses from an eye doctor.
10. What is the form that discloses how financial advisers are paid?
11. Which is more expensive for a family of four: food or financing a new car?
12. How many credit scores do you have?
13. How large should your emergency fund be?
Part of the process of course is discussing the terms. Kids know what an allowance is but probably don't know what a credit report is or even a household budget.
Seems like a lot of common sense questions, but knowing the answers can make the different between having a comfortable life and continual financial struggles.ReplyDelete
Sometimes in a lot of areas I think there is an "I get it" line that needs to be crossed. For example, some people take piano lessons all of their lives and never "get it". Others, at a young age almost immediately see how everything fits together.Delete
I think its the same in finance. Many people don't see the big deal - it's all "commonsense". Others continually struggle and frankly need the obvious pointed out to them.
#1---If I only had a penny for everytime I remember hearing this one.ReplyDelete
#11---This answer is probably changing in recent times. I'd say food prices are gonna be higher. Especially in the near future considering the drought and crop failures in the midwest.
#13---Depends on the emergency. As large as possible, then you are prepared for whatever comes your way.
#1 yes...very common but admittedly eyeopening when you first see it.Delete
#2 Right. Surprising.
#3 The point is that emergency money should be kept perfectly liquid. For example, you wouldn't want it put all in gold because the price of gold may be down when you need it. Size of emergency fund should also be related to job. If job isn't secure you should have larger emergency fund
Ha, I'll take a couple of these. I would rather have the penny doubled every day. I did the math on that one a while ago and was amazed at the difference! In terms of paying for chores, I think I'm a fan. I got paid for chores, and it was a positive experience for me, where I learned about money. I think I am also okay with some chores being requirements just for being a good household member.ReplyDelete
Good points. There is no right or wrong answer for some of the questions. The question on which debt to pay off first elicits different points of view for example.Delete
My dad did that one using a chess board and getting it double every square. Doubling is amazing how fast it become a ludicrous proposition.ReplyDelete
If I had a penny for every time I heard #1, I don't think I would have a dime :-(
These are great questions. Frankly they would be great questions for many kids to raise. Though parents might get made about their failures to practices wise personal finance.
You got a pretty good chuckle out of me with the "If I had a penny..." line!Delete