What’s your financial literacy score?
It’s more important than ever to have the financial literacy skills needed to manage your money and investments wisely.
To help Canadians find the resources they need, a coalition of seven non-profit organizations have joined together to organize this November’s Financial Literacy Month. What better time to take a quick quiz to test your knowledge of a few key financial terms?
Financial literacy quiz
Select which statement you think best answers each of the following questions:
1. What is your FICO score?
- A score of your creditworthiness as determined by Fair, Isaac and Company.
- A score lenders use to determine your ability to repay loans.
- A score lenders use to set the interest rate you will be charged on a loan.
- All of the above.
2. What is the usual “monthly minimum” payment on a credit card statement:
- The total outstanding balance owing on the card as of that month.
- 1% or 2% of the outstanding balance, plus finance charges and fees
- 10% of the outstanding balance.
- 5% of the outstanding balance
3. How much can you contribute to a Registered Education Savings Plan (RESP)?
- Up to $2,000 per year.
- Up to $2,500 per year.
- Up to $5,000 per year.
- You may contribute as much as you want each year up to a maximum lifetime limit of $50,000 per child.
4. Do you pay tax on the earnings on investments held inside a Registered Retirement Savings Plan (RRSP)?
- Yes, the same rules apply to registered and non-registered investments.
- Yes, but you only pay tax on the earnings when you withdraw the funds.
- No, you only pay tax on contributions that are above your annual allowable limit.
- No, the earnings are tax-free.
5. How much can you contribute to a Tax-Free Savings Account (TFSA)?
- Up to 5% of your annual income per year.
- Up to 15% of your annual income per year.
- Up to $10,000 per year starting in 2015 ($5,500 per year, 2013-2014; $5,000 per year, 2009-2012).
- Up to $500 per year.
6. What is a holographic will?
- A will that covers a whole estate.
- A will that is entirely handwritten.
- A will that divides an estate into two equal halves.
- A will that is created online.
7. What is a benefit of contributing to your employer’s retirement savings plan?
- Your contributions can be automatically deducted from your pay cheque.
- You benefit from immediate tax savings.
- Your employer may match a percentage of your contribution.
- All of the above.
8. What are capital gains?
- Income earned in a given tax year.
- Profits on the sale of investments.
- Interest paid on guaranteed investments.
- Annual pay increases.
9. What is term insurance?
- Life Insurance that terminates at age 90.
- Life Insurance that provides lifelong protection.
- Life Insurance that provides protection for a fixed annual payment for a given number of years.
- Life Insurance designed to cover you for the term of your mortgage.
10. What is a payout annuity?
- An annual dividend payment.
- An annual interest payment.
- An annual income tax refund.
- A way to convert savings into regular income payments.
Now, compare your answers against the correct answers below to determine your financial literacy score.
Answers: 1-d, 2-b, 3-d, 4-b, 5-c, 6-b, 7-d, 8-b, 9-c, 10-d
Scored 10 out of 10? Congratulations! You are well on your way to a sound understanding of financial terminology.
Got a few answers wrong? Don’t worry. It’s easier than you think to get the information you need to make wise financial decisions. Learn more about each of the above topics by checking out the following related articles and videos: