Financial Literacy Month: Test Your Money IQ

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April is National Financial Literacy Month. The goal of this month is to increase awareness about the necessity of financial education. Financial Literacy Month originally began as Youth Financial Literacy Day, and was first unveiled by the National Endowment for Financial Education.

The baton was then passed to JumpStart Coalition for Personal Financial Literacy, which introduced Financial Literacy for Youth Month in 2000. Four years later, Resolution 316 was passed by the Senate, making Financial Literacy Month official throughout the nation.

In celebration of this month, The Cheat Sheet created this quiz to help you test your financial IQ. Gather some friends and see who has the most money know-how.


1. What is the range for a base FICO score?

A. 200 to 900

B. 300 to 800

C. 300 to 850


2. This type of retirement plan typically does not require an employee to make contributions.

A. Defined benefit plan

B. Defined contribution plan

C. Neither


3. What is the best way to prepare for a financial emergency?

A. Bridge the gap with credit cards until you get back on your feet.

B. Build an emergency savings fund.

C. Call all of your creditors and ask for an adjustment to your loan terms.


4. How long does charged-off credit card debt remain on your credit report?

A. 10 years

B. 7 years

C. 13 years


5. How often can you receive a free credit report?

A. Once a year from each of the three credit reporting bureaus.

B. As often as you want.

C. You cannot receive a free credit report.


6. What happens after you bounce a check?

A. This information stays between you and your banking institution.

B. A bank representative will call and ask if you would like to transfer funds to cover the check.

C. A record of the bounced check will be reported.


7. How much of your income should be set aside for housing expenses?

A. 10%

B. 30%

C. 42%

Answers


1. What is the range for a base FICO score?

Answer: C

The range for a base FICO score is 300 to 850. The scale for an industry-specific FICO score can be anywhere from 250 to 900.


2. This type of retirement plan typically does not require an employee to make contributions.

Answer: A

This is also known as a defined benefit pension plan. If you work within the private sector, you typically don’t have to make any contributions.


3. What is the best way to prepare for a financial emergency?

Answer: B

The best way to prepare for a financial emergency is to build an emergency savings fund. Financial experts generally recommend having six to 12 months of savings.


4. How long does charged-off credit card debt remain on your credit report?

Answer: B

A credit card debt that has been charged off will be removed from your credit report after seven years. This time limit should not be confused with the statute of limitations, which refers to the amount of time creditors have to sue for unpaid debt. The statute of limitations for debt varies depending on your state and on the type of debt owed.


5. How often can you receive a free credit report?

Answer: A

You are entitled to one free credit report from each of the three major credit reporting bureaus (Equifax, Experian, and TransUnion) every 12 months. You can order your free credit report from annualcreditreport.com.


6. What happens after you bounce a check?

Answer: C

Unfortunately, if you have insufficient funds and a check bounces, this little tidbit will not stay between you and your bank. Your check-writing history is reported to an agency known as ChexSystems.


7. How much of your income should be set aside for housing expenses?

Answer: B

It is generally recommended to spend anywhere from 30% to 35% of your net income on housing-related expenses.


How did you do? If you didn’t do so well, you can always build your financial knowledge by taking online courses, reading personal finance books, or taking a class at your local college. Another great place to sharpen your skills is the public library.

The American Library Association has partnered with the Federal Reserve Bank of Chicago to offer financial literacy courses. Its initiative, Money Smart Week, runs during the week of April 18. Check with your local library to see if it will be offering programs related to Money Smart Week.

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