Americans seem to be managing money a bit more responsibly today than in years past, according to a newly released report from the educational arm of the Financial Industry Regulatory Authority.
In a survey of 25,000 people in the United States, respondents reported slightly better financial behavior in 2015 than in 2012 and 2009. The small uptick in good habits included spending less than earnings, saving cash for kids' college funds and paying down credit card debt.
The bad news?
Scores on FINRA's test for financial literacy — measuring whether respondents understand five basic money concepts — have actually dropped slightly over the last half-decade.
Part of the problem seems to be self-awareness: While 76% of respondents subjectively rated their financial competence as "high" or "very high," only 14% of respondents actually got all five literacy questions correct.
Can you do better?
Here are the questions from the FINRA Investor Education Foundation's website:
1. Suppose you have $100 in a savings account earning 2% interest a year. After five years, how much would you have? Exactly $102, more than $102, or less than $102?
2. Imagine that the interest rate on your savings account is 1% a year and inflation is 2% 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.
You can take the quiz on the foundation's website — or simply scroll down below to see the correct answers.
If you got four or more questions correct, your score puts you in the top 37% of respondents.
While the slight decline in literacy scores since 2009 is less encouraging, the FINRA Investor Education Foundation reported a few more positive trends regarding financial health in the United States, including a decrease in the number of people reporting overdue medical bills, an increase in those who pay credit card bills in full each month and a growing number who are stashing emergency money away in a rainy day fund.
Ready to see some answers?
Here are the correct responses to FINRA's quiz questions: