The Money Quiz That Can Change Your Life

Money Quiz Answers

You think your know your finances? Try this money quiz to see how much you really know, and you might just change your life, and your finances!
1. A financial expert stresses that you should start saving your money as early in life as you can. What is the reason that they say that?

d. The earlier you begin saving the more the magic of compounding applies.

2. What key question should you ask yourself before you make a really big purchase?

c. Ask yourself if your purchase is helping you achieve your goals and needs faster by doing so. Whether you should go into debt may depend on your goals, and your goals may be different than Warren Buffet or Bill Gates.

3. Sam and Joe each have a Traditional IRA account. Sam saves $3,000 a year every year from age 20-29, and then never saves another penny. Joe saves $3,000 every year from age 40 until he retires at age 65. Assuming they both get the same rate of return on their investment, who will have more money at age 65 in their IRA account?

b. Sam will have more. Compounding of interest over those early years will outpace Joe despite his greater contributions.

4. Mary lives 35 miles from work and is thinking about buying a car to commute. She dislikes taking the train to work even though it takes the same amount of time either way she commutes to her job each day. It costs $40 a week for round trip train fare, and she estimates it will cost $30 a week to fill up with gas if she drives. Will Mary save money each week if she continues to take the train instead of driving?

a. Yes, Mary saves by taking the train. Even with sharing the cost of gas with another, owning and traveling by car is more expensive because of wear and tear, depreciation, insurance and maintenance, possible parking charges, as well as the gas. Plus she’d be saving any interest and sales tax charges on her car purchase or lease, all of which makes the car the more expensive choice.

5. Steve just added a new room to his home and it has increased the home’s value by 20%. He needs to increase his homeowner’s insurance coverage now. How much can he expect his premium to increase?

a. Steve will see an increase in his insurance costs, but not nearly 20%. It is good sense to cover any replacement value in full on your home and it may be a requirement by your mortgagor too.

6. Sara puts $20 a week every week in a high interest savings account at 4% interest (compounded monthly) for her newborn son. If untouched, how much will he have in his account on his 21st birthday?

d. About $35,000 with regular contributions and compounding of interest.

7. Alan has a debt of $3,000 on his credit card and pays 16.5% interest on it. If he pays only $45 each month on his debt, how long will it take him to pay it all in full?

d. Amazingly, making just minimum payments at high interest rates on your credit cards can literally take more than a decade to pay off.

8. You sign a guarantee (co-sign) for a car loan for your best friend. Your friend defaults on the loan and you are now getting collectors calling every day. What is the amount you are obligated to pay on the debt?

a. You are stuck paying off the debt. Signing for someone is a high risk. You can try and get the money from your friend though the courts at some point but you are responsible to pay up first when he or she defaults!

9. Your bank sends you an email saying that there is a problem with your account and provides a link for you to click to help clear up the problem. You should

b. Don’t click on any emails like the example from your bank to “fix” a problem with your personal info. You should call the bank to inform them with the number you normally use to contact them. Telephone numbers in bogus e-mails are all part of a scam to get access to your accounts.

10. You own your current home with no mortgage when you retire. About how much of your current income do experts say you will you need to live in the same lifestyle you have right now while in retirement?

c. Experts say you will need about 67%. That means if you are currently living on an income of $75,000 a year, you will need an income of about $50,000 to maintain that lifestyle in retirement. If you retire at 67, and live another 20 years, you will need about $1,000,000 in that example to have enough available in retirement. That money can come from various sources including your retirement plan and Social Security benefits.

11. Sue is 55 and is planning to retire this year. How many years should she be planning her funds to last in her retirement based on her age right now?

c. 30 years. According to life expectancy in the USA, women who are now 55 will live to an expected age of 83. Men are expected to live slightly shorter spans, to an age of 81 as of the latest 2016 statistics.

12. Mary and Alice decide to share an apartment together. Mary puts the electricity, cable, and phone in her name and they split the bills in half each month. After 8 months, Alice decides to move out and leaves the apartment. Can Mary get Alice to pay for half of the bills including the rent until the end of the lease?

d. Since Mary’s name is the only one on the accounts and the lease, she is on the hook for the bills and can’t make Alice pay. She can seek the courts to rule that Mary is responsible for half the bills if she has some form of proof to their agreement. The lesson here is to always get the people you share expenses with to sign a legal document so you have recourse if the situation ends badly.

How did you do? If you scored at least an 8, you have some idea about your finances. 9-10, you are doing a pretty good job at understanding the issues you face about your money. More than 10, you might just be a great advisor to others, your friends, and your relatives! You understand a lot about your finances. Less than 8? Now is the time to start adding to your knowledge by reading and seeking professional help where necessary.

There is no shame in asking for help with your finances. Whether it is from your parents or an experienced, trusted friend or a professional licensed advisor, sooner or later we all need some advice. Don’t make foolish assumptions that can derail you from your financial goals. Believe me when I say that those bad experiences leave scars.

How did you do? Were you surprised at your results? Do you have a quiz question to add?

About Gary Weiner @ Super Saving Tips

Over the last 45 years I've worked in retail (department stores and supermarkets) and financial planning. In addition, I am a shopper, born and bred, who enjoys the challenges of finding the best items for the best prices. When I'm not busy saving money or writing here at Super Saving Tips, I enjoy baseball, music, and classic movies. I am retired and live in New Jersey with my wife.
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  1. Great quiz Gary! I scored an 8. #5 and 11 tripped me up. I do review our insurance periodically but have never made any big additions on our home to have to increase the policy.

  2. Hey Gary, You know that last paragraph would make a great post. I missed more than I thought I would, and I’m AWFUL about asking for help. (Looking for research/advice, fine. Asking for help? not so much.)

  3. Great post Gary! This quiz is the best personal finance lesson I ever got!

  4. Awesome quiz. I think you should re-post it a few times a year.

    I scored a 7 but I was too lazy to pull out a calculator for #6 and 7 and I didn’t know the answer to #10 because we spend far less than what the experts come up with.

  5. I found the commuting question to be interesting. Right now the goverment pays you 53.5 cents per mile to drive for them, and allows other employers to pay that much, without it being considered income for the recipient. Looking at Mary, she’s 35 miles from work, or would drive 70 miles round trip per day. At 53.5 cents per mile, her daily cost could be $37.54, almost what she is paying for a weekly train ticket.

    • RAnn, I am not aware of any employers who will reimburse you for a commute to your workplace round trip. In my experience, it was for mileage that was not your routine commute that I was reimbursed for and is typically what’s done. Government allowances are for business use, but not for a regular commute to your place of business. That’s why I listed the answer the way I did. It might have been a different discussion if she travelled for her job. Thanks for bringing up an interesting point.

  6. Ok I flunked. I learned a lot but most of it is too late!
    Great quiz.

  7. The Mary and Alice one is tricky. But where would Judge Judy be without the Mary and Alice’s of life?

  8. Totally made me pull out the calculator! Fun post, Gary!

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