Why Financial Literacy Matters

Financial literacy is the ability to understand and use financial skills like budgeting, saving, investing, debt management, and retirement planning. Studies show that financially literate individuals are more likely to save, invest, avoid high-cost debt, and retire comfortably.

How to Use This Calculator

Answer 10 multiple-choice questions covering core financial concepts. The tool scores your responses and gives you a percentage and letter grade so you can identify knowledge gaps and focus your learning.

The Financial Literacy Formula

Score = (Number of Correct Answers / Total Questions) × 100

A score above 80% indicates strong financial knowledge. Below 60% means you’d benefit from financial education.

Key Areas of Financial Literacy

Budgeting: Track income and expenses
Emergency Fund: Save 3–6 months of expenses
Compound Interest: Let your money grow over time
Investing: Diversify to reduce risk
Debt Management: Avoid high-interest credit cards
Retirement Planning: Use tax-advantaged accounts

Next Steps

Review incorrect answers and learn the concepts
Read personal finance books or blogs
Use our free calculators to practice real-world decisions
Teach financial skills to children and family

Recommended Resources

"The Psychology of Money" by Morgan Housel
"I Will Teach You To Be Rich" by Ramit Sethi
Khan Academy Personal Finance (free online courses)
NerdWallet & Investopedia for practical guides

Financial Literacy Score Calculator

If you save $100 with a 5% annual interest rate, how much will you have after two years with compound interest?

If inflation is 3% and your savings account earns 2%, what happens to your purchasing power?

What is diversification in investing?

What does an emergency fund typically cover?

Which is generally riskier over the long term?

What does APR stand for?

What is a budget?

What is compound interest?

What is a credit score used for?