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# The Easy 5-Question Money Quiz Everyone Is Flunking

Suppose you have \$100 in a savings account earning 2% interest a year. After five years, how much would you have?

A. More than \$102

B. Exactly \$102

C. Less than \$102

Now... imagine that the interest rate on your savings account is 1% a year and inflation is 2% a year. After one year, would the money in the account buy more than it does today, exactly the same, or less than today?

A. More

B. Same

C. Less

If interest rates rise, what will typically happen to bond prices? Rise, fall, stay the same, or is there no relationship?

A. Rise

B. Fall

C. Stay the same

D. No relationship

True or false: A 15-year mortgage typically requires higher monthly payments than a 30-year mortgage but the total interest over the life of the loan will be less.

A. True

B. False

True or false: Buying a single company's stock usually provides a safer return than a stock mutual fund.

A. True

B. False

The answers to the above are A, C, B, A, and B -- and if you got them all right, or even got just three of them right, you should be proud. (Sort of.)

But would you believe that the average score of American adults who took this five-question test sponsored by FINRA (the nongovernmental Financial Industry Regulatory Authority) was less than 3 out of 5?

That's right. In fact, your average test-taker across these 50 United States got just 2.88 of these questions correct, a grade that works out to 57.6% -- or F-plus.

And the specifics are even more jarring. When broken down state by state, some states certainly did better than the average, but some states did notably worse. Notably, in Mississippi, test-takers returned an almost 50-50 record of 2.53 correct guesses out of five.

Worse yet, the very most financially literate state in the Union, Utah, still only scored a 3.23 -- a solid D at 64.6%.

So, how'd you do?
So, after answering the five questions above, it's time to answer the question you really want to know -- the question that will interest car-wreck rubberneckers and report card over-shoulder-peekers alike:

Which are the top 10 most financially literate states in the nation and which are the bottom 10.

The 10 states with the "best" scores

• Utah -- 3.23 correct answers out of five
• Montana  --3.19
• Wyoming -- 3.18
• Idaho -- 3.16
• Colorado -- 3.13
• New Hampshire -- 3.12
• Alaska and Hawaii -- tied at 3.07
• Iowa -- 3.06
• South Dakota -- 3.05

The 10 states with the worst scores

• Mississippi -- 2.53 correct answers out of five
• Louisiana -- 2.67
• Arkansas -- 2.70
• Ohio -- 2.71
• New York -- 2.72
• Texas -- 2.73
• Kentucky -- 2.73
• South Carolina -- 2.75
• Alabama -- 2.77
• West Virginia -- 2.77

Now...it's time to get serious.

If this is the best our nation can do at graduating financially educated adults -- a solid D for the class president, and an average failing grade for the class as a whole -- maybe it's time we stop grading on the curve. It's time to spend more time teaching our kids the basics of financial education.

Because the next "Great Recession" is always right around the corner -- and right now, Americans are woefully uneducated about how to navigate it.

Motley Fool contributor Rich Smith got a perfect score on FINRA's test.

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.

• ###### Report this Comment On June 22, 2013, at 12:39 PM, mewp12 wrote:

I got them all does that make me a financial genius?

• ###### Report this Comment On June 22, 2013, at 6:16 PM, herky46q wrote:

I got them all, but I could care less about the bond question.

• ###### Report this Comment On June 22, 2013, at 7:53 PM, arrrrrrrough wrote:

foolish is right. it has nothing to do with whether you can save money or not or invest it. did anybody learn anything from it? i forgot it is foolish.

• ###### Report this Comment On June 22, 2013, at 8:24 PM, MamaKats09 wrote:

I got 4 out of 5 right, sorta at the top edge of the curve....but then Calif wasn't on the test list, so is it just the East coast that's that failing????????

• ###### Report this Comment On June 25, 2013, at 10:55 AM, gskinner75006 wrote:

Simple test but there is no true or false in this question "True or false: Buying a single company's stock usually provides a safer return than a stock mutual fund."

• ###### Report this Comment On June 25, 2013, at 11:07 AM, KombatKarl wrote:

I got 5 out of 5, but maybe that's just because I'm Foolish. But the questions seem like common sense to me, which makes the average scores really scary. Before I became Foolish, the only question I would be guessing on is the bond question.

• ###### Report this Comment On June 25, 2013, at 11:08 AM, Schneidku40 wrote:

There's no doubt Americans need more financial literacy. IMO, this is a large reason why money is being shuffled to the top 1-5% and the number on government assistance programs is going up over time. As more people dumb themselves down, the few with the intellectual edge are in position to take it. If you want to fight unemployment, educate yourself and your family.

• ###### Report this Comment On June 25, 2013, at 2:22 PM, phealy3330 wrote:

I put the full dataset in a fusion table and added the state population as another column.

• ###### Report this Comment On June 25, 2013, at 2:23 PM, stockdissector wrote:

It figures that West Virginia would be in the bottom.

• ###### Report this Comment On June 25, 2013, at 3:04 PM, pa49erfan wrote:

I got 5 out of 5, how does it break down by age groups ?

• ###### Report this Comment On June 25, 2013, at 3:48 PM, PoorerThanU wrote:

5 out of 5. That should help Texas' score, yah?

Truth be told. Things have been this way since time began. Money is attracted to people and stays with people that treat it the best.

Interesting political note: Most of the best score states are red states or barely blue. Most of the worst score states are red states too. WTH does that mean?

Yes, age groups would be most interesting too!

• ###### Report this Comment On June 28, 2013, at 3:28 PM, chillydog56 wrote:

I got 5 out 5 and everyone should. These are basic questions. Our k-12 education system does a terriable job of providing kids/teens with the basic tools they need to understand the time value of money. They also do not get an understanding of the impact of interest rates as either a consumer or a saver. How many teens get out of high school and buy a \$25K plus car. The answer to way too many. you have to memorize the date something happened in history but they do not teach you the ramifications of borrowing \$200k at 6% for 25 years. The system is set up to make worker bee and not thinkers, It is foolish to continue to allow the education system we have.

• ###### Report this Comment On June 28, 2013, at 3:56 PM, DonXWebb wrote:

5 out of 5! I was able to answer them correctly because I am a Fool! How about a REAL challenge?

• ###### Report this Comment On June 28, 2013, at 4:08 PM, keis1928 wrote:

this 85 year old had no trouble scoring 5 of 5 and starting today every member of my family who shows will get a lesson featuring those 5 questions.

• ###### Report this Comment On June 28, 2013, at 4:17 PM, Dunrobin38 wrote:

It would be interesting to see how many financial advisors and newslettter editors scored 5/5. Of course I did - am I not a Fool? ;)

• ###### Report this Comment On June 28, 2013, at 4:38 PM, deerslayer2014 wrote:

I'm guessing the morons that could not get 3 or more of the answers correct are part of the "47%" crowd...

• ###### Report this Comment On June 28, 2013, at 6:05 PM, LeeG3 wrote:

As many of the comments stated, this test is basic knowledge. A breakdown by age would be very interesting.

I was always amazed when young co-workers would ask me into what funds they should invest their 401k money. They were not motivated to do the "work" to figure out what would be best for them and their retirement. Why? Is it something that they learned from their parents (live for today and don't worry about tomorrow?) These were college-educated people so I don't think that it was lack of ability.

So is planning for the future no longer part of growing up? Or is the fact that we are Fools that makes us more responsible than the general population?

• ###### Report this Comment On June 28, 2013, at 6:22 PM, tarheel1110 wrote:

Yes, I scored 5 out of 5 and I quite sure I would have 55 years ago at age 20. Economics was a required high school course and probably anyone that received a C or better in the course would have beaten the National average.

The rank of NY surprises me. I'm not saying I would have positioned the other 19 States in the correct group, but none other than NY surprise me.

• ###### Report this Comment On June 28, 2013, at 11:01 PM, boris6100 wrote:

If you didn't get 5 try:

https://www.coursera.org/course/introfinance

I'm working through this now - well worthwhile to update you investment prowess.

... and thank you to fellow Fool who recommended this free course, i can't recall where I saw it, but thanks anyway.

• ###### Report this Comment On June 29, 2013, at 4:36 AM, greenknight32 wrote:

I'm shocked; I knew people were kinda clueless about finance, but that was the easiest quiz I've ever taken!

• ###### Report this Comment On June 29, 2013, at 11:31 AM, TheAbbevilleKid wrote:

Why exactly was this article written? More inane news to fill webpages on the internet perhaps?

• ###### Report this Comment On June 29, 2013, at 12:14 PM, Domenickoh wrote:

I got all 5 right, but then they seemed pretty basic questions. It's a sad commentary on the financial literacy of our country with the results shown above.

• ###### Report this Comment On June 29, 2013, at 6:03 PM, wavekrusher wrote:

My 14 yr old daughter went 4 for 5. Teach it at home if they won't teach it in school. Be a responsible Fool!

• ###### Report this Comment On June 30, 2013, at 10:21 AM, joannemary wrote:

I got a 100% but my husband probably wouldn't. He watches sports all day (he's retired) and I watch the business channels. Hehehehehehe!!!!

• ###### Report this Comment On June 30, 2013, at 10:27 AM, joannemary wrote:

Whoops! Just read the questions to him and he got 4/5 correct. I stand corrected.

• ###### Report this Comment On July 01, 2013, at 7:17 PM, blesto wrote:

Reminds me of what Dr. Michio Kaku said about our educational system...

http://youtu.be/e7D3_eGaO5k

"50% of all PhD candidates in are foreign born"

• ###### Report this Comment On July 02, 2013, at 7:35 AM, circa1850 wrote:

Schneidku40 said it well on June 25th. The direction our country is going really scares me.

• ###### Report this Comment On July 02, 2013, at 11:37 AM, Schneidku40 wrote:

This goes along with the two major psychological factions that exist. Those who invest in their future and those who consume for today. A large reason the top 1% are where they are is because they have long term goals and can stick to them. The bottom 47% can't see past lunch time. "Oh look, here's \$5 in my hand. What can I spend it on?" How many of the top 1% invest in the stock market, bonds, money market account, etc. or started businesses? How many of the bottom 47% do?

Sure you can argue that the bottom 47% don't have the extra money to do it. But I would ask you this- is that a consequence of their position or is it a symptom of their mindset?

I'm sorry, I'm just tired of rewarding those with little motivation to help themselves while we punish those with the determination. And no, I'm nowhere near the 1%. Not yet :)

• ###### Report this Comment On July 02, 2013, at 2:16 PM, NickD wrote:

Yea agree with that.

• ###### Report this Comment On July 09, 2013, at 5:34 PM, awarenessrus wrote:

I got 5 out of 5. The reason I got 5 out of 5 is because of being a Stock Advisor member for almost two years or so. If I had taken this test before that, I doubt I would have gotten 1 right. Thank you fools, I have learned a whole lot from you.

Awarenessrus

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Rich Smith
TMFDitty

As a defense writer for The Motley Fool, I focus on defense and aerospace stocks. My job? Every day of the week, I'm monitoring the news, figuring out the winners and losers, and tracking down the promising companies for you to invest in. Follow me on Twitter or Facebook for the most important developments in defense & aerospace, and other great stories.

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