Are you financially literate? These 3 questions will tell you
Assessing your financial capability is easier than you think.
Welcome to the ‘Big 3’ financial literacy quiz. These three questions are used by more than 20 countries around the world to help measure financial literacy.
While managing your finances can seem complex, this quiz breaks it down into just three essential concepts: interest rates, inflation, and risk diversification.
What is financial literacy?
Financial literacy is the ability to make informed judgments and effective decisions regarding the use and management of money.
It’s widely considered a vital skill for every Australian, but it’s not necessarily something taught in schools. Instead, we continue to learn and improve our financial literacy as we go through life.
It’s important to remember that financial literacy and the ‘Big 3’ quiz isn’t a measure of intelligence, and some very educated people can’t answer all the questions correctly*.
Why is it important?
Lower levels of financial literacy can have a big impact on your health and wellbeing, as well as your finances.
A study from Your Financial Wellness has shown people who seek out information to improve their financial knowledge are less stressed about money and more likely to make positive financial decisions* which can help them to reach their financial goals sooner.
Three questions to test your financial literacy
Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, what would you be able to buy today with the money in this account?
- More than a year ago
- Exactly the same as a year ago
- Less than a year ago
- Don't know
- Prefer not to answer
Suppose you had $100 in a savings account and the interest was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow?
- More than $102
- Exactly $102
- Less than $102
- Don't know
- Prefer not to answer
Do you think that the following statement is true or false? 'Buying a single company stock usually provides a safer return than a stock mutual fund'.
- True
- False
- Don't know
- Prefer not to answer
Question 1: c
Question 2: a
Question 3: b
What your score means
The good news is, financial literacy is something we can continually improve throughout our lives, so think of your score as a starting point.
If you want to improve your score, we have a number of tools and resources to help you increase your financial knowledge and get a better handle on your finances.
- Your Financial Wellness: A free online tool available to all BCU Bank customers. Whether you’re trying to get out of debt, get into your own home or want to future-proof your finances, Your Financial Wellness can help you feel empowered to take control of your financial situation.
- mymo by BCU app: Just like your very own personal financial assistant, with handy features designed to make your money work for you. Tailored to your needs, mymo safely and securely links all your accounts across all financial institutions in one place. mymo gives you the full picture of your finances, with personalised insights and reminders to help you take control of your budget and reach your goals faster.
- BCU Bank articles: When it comes to money, knowledge is power. That’s why we’re on a mission to help you understand your finances – so you can stress less about money and reach your goals sooner. Whether you’re looking to buy your first home, planning a trip of a lifetime, or just want a little left in your account before pay day, we have the tips, insights, and info to help you make the most of your money. Because the more you know, the less overwhelming banking can feel.