Understanding money management best practices and being able to apply them to your finances is easier said than done.Test your knowledge of these financial concepts, and see where you stand with the YALIEntrepreneurs Financial Literacy Quiz.
Someone who is financially responsible does which of the following?
A.
Pays their bills in a timely manner to avoid debt
B.
Makes the right decisions about major purchases and investments
C.
Understands the need to sacrifice immediate demands and desires for long-term goals
D.
Manages their income
E.
All of the above
2.
It is important to have an emergency fund set aside for which of the following reasons?
A.
You may experience a period of unexpected unemployment with no income.
B.
You may have unexpected emergencies that require a substantial amount of money — for example, major car repairs or medical expenses.
C.
Your friend might invite you on a luxurious vacation with little time to plan it.
D.
A and B
3.
At least how many months of living expenses should you aim to have in an emergency fund?
A.
One to two months
B.
Three to six months
C.
One year or more
4.
Which is an example of good debt?
A.
Credit card debt
B.
Cash advance loans
C.
Student loans
5.
Suppose you put money in a bank for two years and the bank agrees to add 15 percent per year to your account. Will the bank:
A.
Add more money to your account the second year than it did the first year
B.
Add the same amount of money both years
6.
Inflation leads to …
A.
A decrease in the price of goods
B.
An increase in the value of the currency
C.
An increase in the price of goods and services
7.
Suppose over the next 10 years the prices of the things you buy double. If your income also doubles, will you be able to buy less than you can buy today, the same as you can buy today, or more than you can buy today?
A.
Less
B.
The same
C.
More
8.
Is it safer to put your money into one business or investment, or to put your money into multiple businesses or investments?
A.
One business or investment
B.
Multiple businesses or investments
9.
Why is diversification important?
A.
It completely protects your investments against loss.
B.
By spreading money across different sectors and assets, investors can reduce the level of risk.
C.
It limits a company’s products and sectors.
D.
It is not important.
10.
What is the best way to track your expenses?
A.
Pencil and paper
B.
Budgeting apps
C.
Spreadsheets
D.
They are all great. I’ll use what best fits my needs.
11.
Which of these definitions is NOT included in the definition of financial wellness?
A.
A manageable level of financial stress
B.
A state of being debt-free
C.
Emergency savings fund
D.
An ongoing plan to reach future goals
12.
If you want to start your own company, how could you finance it?
A.
Crowdfunding
B.
Partner financing
C.
Savings
D.
All of the above
13.
You should seriously take all of these factors into consideration prior to launching your company, except for ...
A.
Mapping your finances
B.
Excessively furnishing your new office
C.
Assessing the risks
D.
Hiring necessary and skillful help
14.
Which of the following steps should I take now to be prepared to invest and get my money growing for me?
A.
Start saving toward an emergency fund equal to six months of your bills
B.
Start learning more about investing and potential investments
C.
Start looking for a team of trusted advisers and mentors
D.
All of the above
Quiz Outcomes
1.
Not bad! Check out #YALIEntrepreneurs to learn more about effectively managing your finances.
Next time, you'll do better at understanding key financial concepts. These concepts will help you to responsibly manage your finances in the future.
2.
Congratulations!
You excelled at understanding key financial concepts and that will help you to responsibly manage your finances in the future!
