Similar to the Frugal of Cheap Test, I am going to throw another one out there for your enjoyment. I hope that you’ll like this Financial IQ Test as much as the last one and find it somewhat educational as well. Please note that I’ve included a link or two for some questions. These links will take you to related resources on and off this site that I’ve found useful. I encourage you to follow the links and learn more about these financial concepts.
To get your score, just give yourself one point for each question you answered yes to.
Financial IQ Test
Here it is…are you financially savvy?
- You contribute enough to your 401(k) to get the full company matching contribution.
- You fully fund your 401(k) each year.
- You know the difference between Traditional and Roth 401(k).
- You know the difference between stocks and bonds.
- You know the difference between mutual funds and exchange-traded funds.
- You know the difference between Roth IRA and Traditional IRA.
- You contribute to your IRA each year.
- You contribute the maximum amount to IRA each year.
- You know the difference between a discount broker and a full service broker.
- You know how to calculate return on investment.
- You have an asset allocation plan for your investments.
- You automatically add money to your savings and investments on a regular basis.
- You know how compounded interest works.
- You know that taxes and expenses drag down investment performance.
- You know the differences between taxable and tax-sheltered investments.
- You review your portfolio annually to identify tax loss harvesting opportunities.
- You understand the wash sale rule.
- You have an investing exit strategy.
Credit and Debt
- You know who Dave Ramsey is.
- You can explain the concept of Debt Snowball to your friends (+1 bonus if you know Snowflaking).
- You always pay your credit card balances in full.
- You understand how credit card arbitrage works.
- You know that you can get one free credit report per year from Equifax, Experian, and TransUnion.
- You know your credit score.
- You review your credit report every 4 months by stacking your credit report requests.
- You regularly take advantage of credit card reward programs and pay with a credit card when you can.
- You know how to protect yourself against identity theft.
- You understand the concept of financial leverage.
- You know what a price book is.
- You actually have and use a price book.
- You read reviews before making your bigger purchases.
- You take advantage of price protection when you can.
- You use eBates or Upromise to get discounts and rebates for your online purchases
- You use online coupons and coupon codes for your purchases.
- When possible, you buy used.
- You know about and use Craigslist.
- You know about and use Freecycle.org.
- You understand the cost of instant gratification — i.e., you save money for your major expenses instead of taking out a loan or putting it on your credit card.
- You checked for better insurance rates in the past two years.
- You use online services like InsureMe to get the best quotes.
- You know that an independent agent who works with several insurance companies may be able to get you the best deal.
- You know the difference between whole life insurance and term life insurance.
- You know how to calculate your life insurance coverage amount.
- You know that a higher deductible will lower your insurance premium.
- You use the same insurer for home and auto insurance to take advantage of multiple policy discount.
- You understand that most insurance miscellaneous “options” are not worth the money.
- You always analyze the benefits against the opportunity cost represented by the premium.
- You know that price is not the only factor. For example, you should consider the financial stability and soundness of the insurance company in your decision making process.
- You know that too much tax withholding is the same as giving the governments interest-free loans.
- You increased you tax withholding to reduce your yearly tax refund amount.
- You take advantage of the tax-deductible Flexible Spending Account (FSA) for your medical expenses.
- You know how to do your own taxes (even if you hire a tax professional or use tax software).
- You know how itemized deduction works.
- You know the difference between tax deductions versus tax credits.
- You know your tax bracket and effective tax rate.
- You know that one of the best ways to donate is with your appreciated assets — this provides you with a tax deduction and helps you avoid capital gains taxes.
- You know that one of the best sources for tax tips is the IRS.
- You always consider tax implications before making financial moves.
- You have SMART financial goals written down.
- You have a financial plan with well-defined milestones.
- You have an estate plan in place.
- You know how much you’d need to retire.
- You review your financial and estate plan annually.
- You review your financial and estate plan with your family.
- You consult with a financial professional on key decisions.
Saving Money and Expense Control
- You save before you spend.
- You use payroll deduction to make savings automatic.
- You know about the various college saving programs, such as 529 Plan and Coverdell ESA.
- You practice living frugally.
- You don’t spend money on status.
- You use what you buy until they are worn out.
- You keep track of your expenses.
- You leverage free online budgeting tools, such as Mint or BudgetPulse.
- You shopped around for the best cable, internet, and phone package deal within the last two years
- You pack lunch to work to save money.
- You always ask your doctor about alternative medicine and medical procedure to control costs.
- You understand how the Health Saving Account works.
- You understand depreciation, and why it’s better to buy used car.
- You know the difference between active income versus passive income.
- You know about alternative income streams.
- You are actively building your alternative income streams.
- You keep track of your net worth.
- You pay your bills online and/or automatically.
- You have analyzed the advantages and disadvantages of mortgage prepayment.
- You have analyzed the advantages and disadvantages of renting versus buying a home.
- You understand the time value of money.
- You spend less than you earn or earn more than you spend — up to you.
- You have an emergency fund.
Now it’s time to tally up and rate yourself.
- 88+ = Wow…how about sending me some guest posts. 🙂
Note: There is one bonus question, and you get 1 point for each new item that you can add to the list.
- 75-88 = You’re financially savvy. Congratulation.
- 60-74 = Not bad…now you know what to work on.
- 40-59 = Middle of the road with room for improvement.
- below 39 = Please read my blog daily. 😉
Please let us know how you did. I hope you enjoyed this test and thank you for participating.
Pinyo Bhulipongsanon is the owner of Moolanomy Personal Finance and a Realtor® licensed in Virginia and Maryland. Over the past 20 years, Pinyo has enjoyed a diverse career as an investor, entrepreneur, business executive, educator, financial literacy author, and Realtor®.
WOW! What a list!! Great job, Pinyo! I got a 66. I don’t use credit cards and didn’t get to say yes to any of the first 6 under shopping. I certainly have room to improve.
I know a lot of this, but I have to admit that sometimes I don’t act as well on it as I really ought to. *sigh*
Good list with lots of defining resources. There were 88 questions, so how does one get the 88+ score? Is that the award for a guest post? 🙂
There’s a +1 bonus if you know what “snowflaking” is. It’s #2 under “Credit and Debt”.
In any case, I do want guest posts. 🙂
Oh, and you could add your own to get more points 🙂
OK, here are a couple more Miscellaneous ones:
1. You take care of your health. (Poor health can be very expensive.)
2. You brush after meals and floss every day. (Things like bridges and crowns may not be fully covered in many dental plans.)
Shame my score will be skewed by not being American, but I’ll do my best!
@Bryce — Good ones…2 bonus points for you!
@Debtdieter — Sorry, I should have though of my international readers too. 🙁
Not to worry Pinyo, many of these are still very relevant, I’ll simply run my score on my own version of these things! 🙂
I barely scraped by with a 94. I’ll work harder to be beter prepared for the next one. 😉
Wow, what a quiz. 66 for me.
P.S: Thanks for the link!
Wow, what a list! I’ll have to find the time to take this test (I have to admit, I only have a vague idea as to #5. Is it cheating if I go look that up first? 😉 Thanks for linking to my price book post, Pinyo!
Don’t forget my web site which is based on the circle of money – make it, save it, invest it. It’s also multimedia based which makes absorption of the material simple!
Great Quiz and a very nice compilation of sources. I did rather well – I’m almost ready to send you some guest posts. Its the Shopping and Insurance section that got me.
But now I have a lot more knowledge than I started with!
wow – super informative. i’ve also found this multiple choice one from FreeScore.com
This is a pretty thorough quiz! The shopping section killed me. I found another one at youngmoney.com/challenge and you get $25 free in a Sharebuilder account for taking it – among some other stuff.
This is a good idea to offer quizzes like this. It helps people to learn what they can do to be smarter financially.
This is a great idea. I believe that financial IQ is something that is not taught in schools.