Can you answer these three financial questions?

[Cozarkian]

70% of Americans don't know the answers to these questions because they don't have any money to save or invest.

You can get savings accounts with no minimum balances and no maintenance fees, so if you have any money at all, you have enough for a savings account.

So many low income families waste money paying check cashing services when they would be much better off signing up for direct deposit to a savings account and then going to their bank to withdraw cash as they need it.

 

[BoberFett]

70% of Americans don't know the answers to these questions because they don't have any money to save or invest.

That's the stupidest excuse I've read in a while.

 

[ch33zw1z]

I got them right, but based on my interactions with people...I can see the 70% thing.

 

[Mr. Pedantic]

You think 2% is bad, but that would be incredibly good for a savings account. My bank's savings rate is 0.1%, which is considered pretty good since it is a credit union. You can get that rate up to 0.4% if you have more than $30,000 in the account, but who does that lol.

I get 2.75%. I'm actually thinking of switching to another account so that I can get an even higher rate with some tradeoffs.

To be fair, New Zealand does have pretty high interest rates.

 

[Jhhnn]

70% of Americans don't know the answers to these questions because they don't have any money to save or invest.

That's the stupidest excuse I've read in a while.

It's not stupid at all. Given that most Americans are strung out on payment plans, more relevant questions would reference paying interest rather than collecting it.

http://www.nerdwallet.com/blog/credit-card-data/average-credit-card-debt-household/

All too many families fight to maintain an emergency fund & Christmas Club accounts are common. People save for years to accumulate the upfront money to go further in debt buying a house, then borrow against equity when the need/ opportunity presents itself in a cycle of perpetual wage slavery.

Maybe that has something to do with the enormous shift of wealth & income to the tippy-top of the economic heap.

First extract liquidity from the economy, stash it, then charge people to get it back.

The effect on young families is particularly strong given their need to use leverage to acquire reliable transportation & suitable long term housing. It was less of a problem years ago in a more stable economy where a higher % of national income went to workers rather than owners. We've lost the balance we once had in the post-WW2 New Deal way of doing things, and that trend isn't shifting back to favor working people, at all.

 

[hal2kilo]

Its good to see more studies being done and they corroborate the findings of other studies. There have been several studies that show the following:



Yet no one really talks about getting the parents involved. Its all about how the schools have to handle this despite the universally poor results from taking a couple of classes. Heaven forbid we focus on parents having to do work when that has been shown to have the best results



Heh - like the banks weren't going to find other places to charge fees when the government said they couldn't charge them in other areas

For some weird reason, it seems to be a cultural thing. My parents would just go apoplectic when we (us kids) even attempted to devine things like how much money does my dad make, how much money is in the family savings.
I had to learn anything other than just put your allowance in your savings account and don't touch it all on my own.

 

[Cozarkian]

It's not stupid at all. Given that most Americans are strung out on payment plans, more relevant questions would reference paying interest rather than collecting it.

Your most recent post just further illustrates that your prior statement is wrong, because apparently, people do no how to save for Christmas funds or to buy a house. It isn't that people can't answer the questions because they don't have money to save. Rather, the fact that people can't answer the questions helps explain why they lack the knowledge to avoid becoming a perpetual wage-slave. They don't have money because they lack knowledge/discipline, not the other way around.

 

[Darwin333]

For question #1 C: less than $104, many banks charge fees for amounts under $500.00

EDIT: #1 with inflation always higher then the interest rate, your money is always less.

The VAST majority of Americans are flat out stupid if they pay fees simply for having an account. My credit union (which I suggest everyone use a credit union versus a bank) doesn't charge any fees for anything that I use my checking/savings account for, if they had told me there was a monthly fee for the sheer pleasure of holding my money I would have turned around and walked out.

Regardless, you are over thinking the questions, the goal of the questions and the targeted audience. They are very simple math questions that are supposed to be taken at face value without any added variables.

 

[Darwin333]

Yet no one really talks about getting the parents involved. Its all about how the schools have to handle this despite the universally poor results from taking a couple of classes. Heaven forbid we focus on parents having to do work when that has been shown to have the best results

To be fair, I am assuming this is a survey of adults and if so only 30% of potential parents even have the ability to properly teach this to their kids.

It's an absolutely huge positive for our society to know the basic principles of how money works before they get into the workforce and lets be honest, this is really easy math.

 

[classy]

I got the third one wrong

 

[Jhhnn]

Your most recent post just further illustrates that your prior statement is wrong, because apparently, people do no how to save for Christmas funds or to buy a house. It isn't that people can't answer the questions because they don't have money to save. Rather, the fact that people can't answer the questions helps explain why they lack the knowledge to avoid becoming a perpetual wage-slave. They don't have money because they lack knowledge/discipline, not the other way around.

Hardly. Median family share of national income would be 40% higher if the distribution curve of 1978 had been maintained.

WRT housing, compare the growth of wages with the increase in the price of housing for some understanding. Even diligent savers are completely priced out of the market at median wage rates, or their purchase date is far, far in the future & highly dependent upon their economic fortunes in the meanwhile.

 

[Mr. Pedantic]

I got the third one wrong

You're an embarrassment to ATPN and the $150k average salary of its members.

 

[PlanetJosh]

I was concerned they might be trick questions but they're not, they're straightforward. So it's more so a serious thing about the 70%. I got all three correct btw.

 

[MtnMan]

I love paying for something, say a total of $4.52, and handing the retail flunky a $5 bill, and after they have entered $5 into the register, throw 2 pennies on the counter and watch the confusion and panic begin.

 

[dank69]

Sucks that savings accounts now have fees.

I have a very hard time believing that even 30% of Americans missed one of those questions, let alone 70%. Did they do this study at a rave?

I'd say most people don't know shit about stocks and mutual funds, so I can see a lot of people not knowing that one, and wouldn't really think someone that doesn't know that one is an idiot or anything, except for the fact that they probably aren't investing as much as they should be.

The other two, I can see a lot of people shutting down the second they think they need to do math in their head. Even though math isn't really required to answer them, lots of people aren't able to figure that out.

 

[Rakehellion]

Except, the article is trying to imply that not knowing the answers to these questions is one of the reason American are so bad with money. When, as pointed out, that even if I knew the answers, my savings account could still be depleted due to common, not always known about sources.

Because you didn't read your bank's terms and conditions, just like you didn't read the questions. Either way, it's your fault.

 

[Rakehellion]

The problem is the article is attempting to conflate knowledge of simple interest with ability to effectively manage a budget, which in a lot of cases has a lot of user dependent rules.

That is like saying "if you can answer what is 2+2, you should be able to solve complicated algebra problems!"

If you can't add 2 and 2, you can't solve complicated algebra.

If you can't finish a simple online quiz, you can't manage your budget.

 

[Cozarkian]

For some weird reason, it seems to be a cultural thing. My parents would just go apoplectic when we (us kids) even attempted to devine things like how much money does my dad make, how much money is in the family savings.
I had to learn anything other than just put your allowance in your savings account and don't touch it all on my own.

You are right. My parents didn't go apoplectic, but they definitely weren't forthcoming about family finances. That seems like a missed opportunity.

I also feel people are way too secretive about money with each other. The concept of sharing salary information is taboo, but if we made a habit of sharing information with coworkers an colleagues in the same industry, wages would go up as a result of better information for bargaining.

 

[shira]

If you can't add 2 and 2, you can't solve complicated algebra.

If you can't finish a simple online quiz, you can't manage your budget.

I agree with our first point, but not your second.

Lots of people live a "cash" existence. They don't need to understand anything other than addition and subtraction. In fact, with today's low interest rates, the earnings on the types of accounts that most moderate-to-low income people maintain is pretty much irrelevant to their financial lives, so an understanding of how interest works isn't of much use to many people, either. Furthermore, lots of people don't invest in stocks; so why would their ability to manage their day-to-day budget depend on an understanding of stock-buying strategies?

 

[shira]

That's the stupidest excuse I've read in a while.

Stupid? Because it's not true that tons of Americans don't save? Or because it's not true that not saving any money removes a huge incentive to learn about basic financial principles?

 

[werepossum]

I'd say most people don't know shit about stocks and mutual funds, so I can see a lot of people not knowing that one, and wouldn't really think someone that doesn't know that one is an idiot or anything, except for the fact that they probably aren't investing as much as they should be.

The other two, I can see a lot of people shutting down the second they think they need to do math in their head. Even though math isn't really required to answer them, lots of people aren't able to figure that out.

That's a good point. I was thinking because we're constantly bombarded with that message, but considering how many people don't even know who is Vice President, you are correct. Actually those are both good points, but the second (people shutting down the second they think they need to do math in their head) is hard to distinguish from pure D stupidity.

I agree with our first point, but not your second.

Lots of people live a "cash" existence. They don't need to understand anything other than addition and subtraction. In fact, with today's low interest rates, the earnings on the types of accounts that most moderate-to-low income people maintain is pretty much irrelevant to their financial lives, so an understanding of how interest works isn't of much use to many people, either. Furthermore, lots of people don't invest in stocks; so why would their ability to manage their day-to-day budget depend on an understanding of stock-buying strategies?

That's a good point too, it's just difficult to believe that 70% of Americans don't have this knowledge regardless of whether they need it.