Personal finance isn't taught in most schools, leaving us to figure out budgeting, saving, and investing on our own. If you've ever felt confused about where to start or overwhelmed by all the advice out there, you're definitely not alone.
Taking a step back to assess what you already know can help you focus your learning and build confidence. We've created two assessments to help you get clear on your current knowledge: a quick financial knowledge test to see where you stand, followed by a more comprehensive video evaluation that will guide your next steps.
If you struggle with answering any of these, don’t worry, we’re here to help. Let’s get started!
Can You Pass a 7-Question Quiz on Financial Literacy?
Let’s start with a basic financial literacy test to see what you already know about financial planning. You can find the correct answers at the end of this post.
1. What is the Golden Rule of financial literacy?
- Only use credit cards for emergencies.
- Always make payments on time.
- Always spend less than you earn.
2. Your emergency fund should cover ?-? months of living expenses.
- 3-6
- 6-9
- 9-12
3. True or False: 20% is a good interest rate for a credit card.
4. True or False: You should pay off student loan debt before other debts.
5. The 70-20-10 budgeting method dictates 70% for needs, 20% for savings and debt repayment, and 10% for:
- Emergencies
- Healthcare
- Charitable donations and “wants”
6. True or False: You should never discuss personal finances with loved ones.
7. What is a HYSA?
- A banking regulation
- A high-yield savings account
- A lending institution
Now that you’ve completed the financial literacy quiz, you have a clearer picture of your financial knowledge and the areas where you'd like to grow. The video below offers a deeper dive into money management fundamentals and will help you identify which concepts to focus on first.
How to Conduct Your Own Financial Literacy Assessment
The quick quiz above gave you a fun, surface-level snapshot of your money mindset, but now let's explore what's really happening with your finances. If you’re ready to grow your wealth, gain clarity, and make intentional money moves, this in-depth financial literacy test is your next step.
Each of the following questions comes directly from our video and is designed to help you evaluate key areas of your financial life, including cash flow, debt, investing, emergency savings, and more.
Think of this as your personal check-in; a moment to pause, reflect, and get clear about where you stand (with zero judgment). Once you know your starting point, you can create a plan that actually works for you.
Understand How Much You Spend Compared to What You Earn
Last month, did you spend more or less money than you brought in?
This question helps you measure your cash flow—the money flowing in and out of your accounts. Ideally, your cash flow is positive, meaning you're spending less than you earn. If you’re not sure where your money goes, building a regular check-in habit can change everything.
Try this: Set up a weekly money ritual. Spend one hour each week reviewing your income, expenses, and goals. Use that time to:
- Track what’s coming in and going out
- Categorize and review spending patterns
- Update your budget (or start one)
- Make mindful decisions about upcoming purchases
Why it matters: Regular check-ins give you clarity, reduce stress, and help you stay aligned with your financial goals—because what gets measured gets managed.
Know the True Cost of Your Debt
What’s the highest interest rate you’re paying on any debt?
This question focuses on debt management. Not all debt is bad, but high-interest debt can quietly sabotage your financial progress if you're not paying attention.
Here’s a quick breakdown:
*Assuming reasonable interest rates and strategic use
Rule of thumb: If you’re carrying debt with interest rates above 7%, make paying it off your top priority before investing. Even a solid return on investment can’t compete with the drag of high-interest debt.
Check If Your Investments Are Working for You
What percentage of your investments are in stocks?
This question reflects your asset allocation—how your investments are divided across different asset types like stocks, bonds, and cash. Asset allocation matters because it affects both your risk level and growth potential.
Smart allocation by age (general guidance):
- 20s–30s: Heavier in stocks (70–90%) for higher growth potential
- 40s–50s: Begin shifting toward stability (50–70% stocks)
- 60+ or nearing retirement: Focus on preserving wealth (30–50% stocks)
Not sure how to rebalance? Target-date funds are a simple, hands-off solution. They automatically adjust your portfolio as you approach retirement.
Want to learn more about smart investing? Don’t miss our free masterclass where we break it all down for you.
Calculate Your Net Wealth (aka Net Worth)
What’s your net wealth (aka net worth)?
Knowing your net wealth, or the difference between what you own and what you owe, is one of the clearest ways to measure your overall financial health. It helps you set goals, track progress, and make more informed money moves.
Here’s how to calculate it:
- List your assets (what you own):
- Cash & savings
- Investments
- Retirement accounts
- Real estate
- Vehicles
- Business equity
- List your liabilities (what you owe):
- Mortgage
- Student loans
- Credit card balances
- Personal loans
- Do the math:
Net Wealth = Total Assets – Total Liabilities
Tip: Track your net wealth every 3–6 months to see progress. A positive number means you’re building wealth. A negative one just means it’s time to course-correct.
Build a Financial Safety Net for Emergencies
Your car just broke down and it’ll be a $1,200 repair. How will you pay for it?
This question assesses your financial security, specifically, whether you have sufficient cash reserves to cover unexpected expenses without incurring debt.
Enter: The Emergency Fund. An emergency fund is a crucial component of financial stability and peace of mind. It’s a dedicated savings account designed to provide a financial cushion during unexpected circumstances.
- Aim to save 3–6 months of living expenses
- Keep it in an easily accessible high-yield savings account
- Use it only for true emergencies (job loss, medical bills, urgent repairs)
A solid emergency fund brings peace of mind and protects your long-term goals from being derailed by short-term surprises.
Make Your Savings Work Harder for You
What’s the interest rate on your savings account?
This measures how much your money is growing while it’s parked. If your savings are sitting in a traditional account earning the national average of 0.38%, you’re leaving money on the table.
Solution: Switch to a High-Yield Savings Account (HYSA)
- Often earns 4% or more with the same accessibility
- FDIC insured (just like traditional savings)
- Easy to set up online
A better interest rate = free money. Let your savings earn while you sleep.
Read our blog on how to pick the best high-yield savings accounts!
Prioritize Consistent Retirement Contributions
How much do you contribute to your retirement accounts every month?
This question evaluates how prepared you are for the long game. Retirement may seem far off, but the sooner you start, the easier it is to build a comfortable future thanks to compound interest.
Why consistent contributions matter:
- Compounding: The earlier you start, the more your money grows
- Dollar-cost averaging: Helps smooth out market ups and downs
- Employer match: Max out those free dollars if you’ve got them
- Flexibility: Regular saving makes it easier to adjust for life changes
Pro tip: If you’ve already paid off high-interest debt and built a starter emergency fund (at least $1,000), it’s time to put retirement savings on autopilot.
Whether it’s a 401(k), IRA, or both, automate your contributions, increase them annually, and stay consistent. Future you will thank you.
Want to Improve Your Financial Wellness and Financial Literacy?
All right, pencils down! Your financial literacy test is complete.
Whether you nailed every question or found a few areas that made you pause, remember this: financial wellness is about being proactive. And the fact that you’re here taking a basic test of financial literacy means you’re already on the right path.
So, what’s next?
- Revisit any questions you struggled with and turn them into your action plan
- Build momentum by learning the basics of budgeting, investing, and wealth-building
- Start building real confidence with your money, one smart step at a time
If you’re ready to go from feeling uncertain to feeling unstoppable, we’ve got just the next step for you.
Take our financial planning quiz to get a personalized roadmap for improving your money habits and building the financial future you deserve.
We also recommend our money management skills masterclass, where we teach you the exact system we used to go from overwhelmed to financially free. You’ll walk away with the tools and clarity to make your money work for you, not the other way around.
Financial Literacy Test Answers
- Answer: c) - Always spend less than you earn.
While a) and b) are important, consistently spending less than you make is the foundation of financial wellness as it creates room for saving, investing, and staying out of debt.
- Answer: b) 6-9
Aim for three to six months' worth of living expenses in your emergency fund, ensuring you are prepared for unexpected events and can navigate through challenging times without undue financial stress.
- Answer: False
A 20% interest rate is high and can lead to long-term debt. Aim to pay off balances monthly to avoid interest altogether.
- Answer: False
Not necessarily. High-interest debts (like credit cards) should usually be paid off first, as they cost you more over time than low-interest student loans. For more information, read our guide on what to do before you pay down debt!
- Answer: c) Charitable donations and “wants”
This method encourages balanced spending—covering essentials, building financial security, and allowing room for “wants” like dining out or entertainment.
- Answer: False
Open, honest conversations about money can strengthen relationships and align shared goals, especially with partners or family members.
- Answer: b) A high-yield savings account
A HYSA offers significantly higher interest than a traditional savings account, helping your money grow faster while staying accessible. The average interest rate for savings accounts is currently 0.38% while high-interest accounts average 4.20% - 5.00% APY.
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