Do You Have Your Money in Order? Take This Personal Finance Quiz

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Personal finance, defined as the process of planning and managing personal financial activities, has become an issue of concern for Americans, both young and old. 

Every day, we are met with the decision on where we will spend our money; whether it be clothes, food, hobbies, or anything in between. Stress can be a direct result of not having your money in order, as you may become unaware of whether or not you can cover recurring expenses.

As the cost of living increases, it can be vital to maintain a general knowledge of your finances and remain aware of current trends in today’s markets. One great way to do this is by creating a long-term financial plan. 

However, reports show that only 30% of Americans have a long-term financial plan, and that this is a major contributing factor to the current debt crisis. 

Why is personal finance such an issue for Americans? With fewer than half of the US requiring students to take a course in personal finance, this could be a contributing factor. 

Without gaining knowledge on mortgages, loan debt, interest rates, credit card usage, etc., youth may be growing up without any beneficial knowledge on finances resulting in poor spending habits.

What is a personal finance plan?

Defined as a document that contains an individual’s current financial situation – including long-term goals and strategies – a personal finance plan is one key way to aim for financial success.

It can be difficult to maintain an accurate understanding of your savings goals and where you’re up to achieving them without this kind of plan. What’s more, with everyday expenses constantly increasing, keeping a track of these and updating your plan can be incredibly useful. 

While an intimidating term, personal finance is a concept that we may want to have at the forefront of our minds if we want to experience financial stability throughout our working years and into retirement. 

Statistics show that 56% of millennials and 39% of Baby Boomers and GenX do not have a retirement account – somewhat alarming numbers if you think of the current state of our nation’s financial stability.

How Do I Take Charge of My Personal Finances?

Becoming aware of your current financial situation can be the first step towards taking charge of your personal finances.

While reports inform that roughly two-thirds of Americans would find it impossible to gather $1,000 in an emergency, you don’t have to fall into that statistic.

To take charge of your personal finances and create financial stability for you and your family,  aim to maintain a general knowledge of what personal finance entails.

Take this personal finance quiz to test your knowledge on personal finance and discover whether you’re on track – or need to course correct – your own personal finance situation.

Personal Finance Quiz

Q1: What is the purpose of a personal finance plan?

  1. To plan how you are going to spend your money throughout the week.
  2. To specify financial goals and how you are going to complete those goals.
  3. To keep track of what you spend and where so you can adjust your spending habits.

Q2: Which of these choices best represents the purpose of an emergency fund?

  1. Money you have saved for when you run out of cash.
  2. Money you have saved for unexpected (major) expenses.
  3. Money you have saved for a specific major expense.

Q3: Which of these defines “budgeting”?

  1. Setting goals by estimating income vs. expenses to determine how much to save and how much to spend.
  2. Creating a table of contents that shows how much you are spending on everyday items.
  3. Determining how much income you make in a year.

Q4: What is the ideal amount to save for retirement? 

  1. 1-2% works for most lifestyles.
  2. 5-15% if you can.
  3. No less than 15%.

Q5: Which of these choices influences credit score the most?

  1. Keeping your credit card debt as low as possible.
  2. Using your credit card regularly.
  3. Your income.

Q6: Which of the following statements is true? (Only one applies)

  1. You can use savings accounts and checking accounts to transfer money.
  2. You can only transfer money with a savings account but you can extract cash from both savings and checking accounts as many times as you need to.
  3. Saving accounts only allow you to extract money a limited number of times per month.

Q7: Out of these choices, which is the best way to use your credit card?

  1. As much as possible, in order to raise your credit score. 
  2. Keep it balanced with cash/debit so as to not accumulate debt but have a good credit score.
  3. As little as possible so as to not accumulate debt and not lower your credit score.

Q8: Should you include mortgage and rent in your cash outflow statement?

  1. Yes, both.
  2. Only rent, as it can vary with time.
  3. Only mortgage, as it is long-term.

Q9: What is the best way to record your assets?

  1. The value you acquired them at.
  2. Current market value.
  3. It depends on the asset.

Q10: Which of these choices is the best way to build an emergency fund?

  1. Save something every month.
  2. Save a large amount of money when you get paid..
  3. Make an investment.

Q11: Ideally, how much should rent or mortgage cost?

  1. No more than 10% of your salary.
  2. No more than 30% of your salary.
  3. No more than 40% of your salary.

Q12: Financial Plans should be…

  1. Complex and difficult to understand.
  2. Monitored and updated annually.
  3. Only used when you want or need to make an investment.

Q13: What is a Personal Cash Flow Statement?

  1. A statement that determines personal investment growth.
  2. Documentation outlining how much cash you are expected to earn for the year.
  3. A statement that measures a person’s cash intake and outtake.

Q14: What is the best representation of your financial position?

  1. The number of cars you have in your garage.
  2. Your net worth as shown on a balance sheet.
  3. Your overall spend every year on vacation.

Q15: Which debt is recommended to pay off first?

  1. The one with the highest interest rate.
  2. The smallest ones.
  3. Either, as long as you don’t acquire new debts.

Q16: Which of these is a good practice to get out of debt?

  1. Spending less on everyday expenses.
  2. Withdrawing from your retirement savings account.
  3. Using your emergency fund.

Q17: What’s the difference between tax reduction and tax credit?

  1. Tax reduction means you pay less; tax credit means you have an amount in your favor.
  2. They both mean the same thing.
  3. Tax reduction means your taxed income is less; tax credit means you pay less based on what you owe.

Q18: Generally, is it better to invest short term or long term?

  1. Short-term if you are young, long-term if you’re 50+.
  2. Long-term if you are young, short-term if you’re 50+.
  3. Always long-term, as it gives higher returns. 

Q19: What is the benefit of fixed-interest loans?

  1. Interest tends to be low.
  2. You usually start paying later than with other loans.
  3. The rate won’t vary whatsoever.

Q20: What is the benefit of variable-interest loans?

  1. Interest rates tend to be low in the beginning.
  2. You usually start paying later than with other loans.
  3. They vary in accordance to the amount you are borrowing.

Final Thoughts

While getting your personal finances in order can be a key element of financial success, it is not as simple as creating a personal financial plan. 

Making sure that your personal finance plan also mirrors your values and aspirations is another key step. 

If you create a plan for the sake of creating a plan, you may find success hard to reach. Aim to sit down and understand what goals mean the most to you – and why. 

Understanding where your motivation comes from can help you to create a plan that better suits your personal needs and goals. 

Need help creating your personal financial plan? There are professionals out there ready to help you create a personal financial plan best fitted to your long-term goals. 

Aspiration provides all the tools you need to save and invest in a sustainable manner – for you and for the environment. It is never too late to begin planning for your future.

Answer Key

Q1: Answer – B

Q2: Answer – B

Q3: Answer – A

Q4: Answer – B

Q5: Answer – A

Q6: Answer – C

Q7: Answer – B

Q8: Answer – A

Q9: Answer – B

Q10: Answer – A

Q11: Answer – B

Q12: Answer – B

Q13: Answer – C

Q14: Answer – B

Q15: Answer – C

Q16: Answer – A

Q17: Answer – C

Q18: Answer – B

Q19: Answer – C

Q20: Answer – A

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