Could you pass this financial literacy quiz?

How money savvy are you? Put your knowledge to the test with Canstar’s TestMyMoneyIQ quiz. 

Do you know the answer to the following question? If a credit card offers an interest-free period of 55 days that generally means that you don’t pay interest on any purchases until 55 days after you buy the item. True or false?

This is one of 21 questions in Canstar’s new TestMyMoneyIQ quiz which is designed to enable Aussies to assess their knowledge of basic financial concepts. The correct answer, by the way, is ‘false’ but only 19% of the first 1,000-odd Aussies to take the test actually got it right. It’s the top question that most people failed to answer correctly.

The TestMyMoneyIQ quiz delves into practical money situations that we all have to deal with and covers everything from home loans, credit cards and insurance to superannuation, mobile plans and electricity bills.

Only 54% of Aussies passed the quiz but what I found especially concerning was the financial literacy gender gap – something that I hoped would not exist given the questions are about products and services that most of us use every day. While 66% of men passed the quiz, only 42% of women could say the same.

There’s also a generation gap with older generations performing better than younger ones. Just 30% of Gen Z and 47% of Millennials got the majority of the questions correct, while a much higher 60% of Gen X and 72% of Baby Boomers passed the test.

And many Aussies overestimated their money knowledge. Even though 60% of Australians consider themselves to be financially literate, the average score was just 11 out of 21. Only 6% got 17 or more questions right – a score equivalent to 80% or higher.

These results highlight that many Aussies have a long way to go when it comes to their money knowledge.

And given we’re in the midst of a cost-of-living crisis, there’s no better time than now to build on your financial literacy. Sure, financial education won’t reduce grocery and petrol prices or slash the rate on your mortgage in half, but it can go a long way to improving your bottom line. Understanding basic money principles and putting them into practice on things such as your everyday bills can be an easy way to claw back some much-needed savings.

That is the goal behind the TestMyMoneyIQ quiz – to help you get a better understanding of your financial knowledge and highlight the areas you may need to brush up on to help you make better money decisions.

Let’s go back to the question about how interest-free days on a credit card work as an example. Most Aussies think that if a credit card offers an interest-free period of 55 days, it generally means that you don’t pay interest on any purchase until 55 days after you buy the item. That’s not the case. Interest-free periods typically start on the first day of your statement period. To get the full 55 days interest-free, a purchase would need to be made on the first day of your statement period and you must have paid the previous statement’s closing balance in full.

Not realising this could mean you end up paying more interest than you bargained for. On the flipside, understanding how the interest-free period works could help you plan your purchases better. For example, buying big-ticket items at the start of your statement cycle will give you a longer time to pay off your credit card before any interest is charged.

Now, it’s important to remember that financial literacy isn’t about being good at maths. Most household budgets don’t fall apart because people don’t know how to add or subtract. They fall apart because many people simply don’t know how to apply the fundamentals of financial literacy to their everyday lives. That’s why our financial literacy test focuses on questions about the products and services that we use day in and day out.

Remember, financial literacy is an important life skill that can help you make smart money decisions and positively impact your life in the long run. I encourage you to take the TestMyMoneyIQ quiz to see how you measure up.

Cover image source: fizkes/Shutterstock.com