Rate Your Financial Literacy

If you had to take a quiz on personal finances (from IRAs and interest rates to credit scores and “good debt”), would you pass? Far too many Americans would not. In order to truly get this economy back on its feet, each of us have to take mindful action when it comes to our finances.

Understanding finances has proven to be a challenge for many Americans. According to a 2013 National Foundation for Credit Counseling survey, “40 percent of American adults gave themselves a grade of C, D, or F on their knowledge of personal finance.” And nearly 78 percent believed that they could benefit from professional advice on finances. Considering the state of our economy, we could all benefit from learning more about finances.

Since America’s most recent economic crash, government officials have been researching major ways in which they could boost the economy. One step that every American can take to improve our economy is by simply learning more about their own personal finances. If we are more knowledgeable about our finances, we are more likely to make wise decisions about things like budgets, loans, and retirement plans. In the end, wiser and better-informed citizens make for a more stable country.

As you go through your finances review, consider these Mindful financial topics:

1. Budget. This is the area that most Americans are familiar with, but we could all do with a refresher course, right? For instance, there are new ways to track your income and your expenses. You can find more information here.
2. Credit. Understanding credit scores is vital to financial literacy. You’ll need to know what factors into your score (like payment history, amounts owed, and length of credit history) and what you can do to improve your score.
3. Debt. Some Americans struggle in their understanding of interest rates. So understanding how long you’ll be paying your debt and how much it will cost you in the long run is important. Understanding the difference between “good debt” (student or business loans) and “bad debt” (credit/charge cards) is also important.
4. Investments. Though many people are skeptical, the stock market is still one of the top ways people invest their money. Finding the right investment for you is important for basic financial literacy. You can find information here.
5. Savings. You’ll want to know exactly how much money you’ll need to save now in order to retire, buy that dream house or send your kid to college. You can find information here and here. It’s also best to know just how much money you’ll need in an emergency fund.

Other topics: The National Financial Educators Council lists other topics for financial literacy like income, business relations, risk management, and types of accounts.

Bonus: Finances Quizzes. Want to test your financial literacy? You can find short quizzes through Yahoo!, Daily Finance, and NPR. For a more thorough quiz consider the BBB and the National Financial Educators Council.