Financial Literacy: Understanding the Basics

What is financial literacy about?

• Memorizing financial laws and regulations

• Understanding and applying concepts like budgeting, credit, saving, borrowing, and investing

• Knowing how to calculate interest rates

• Learning about different currencies around the world

Why is becoming financially literate important?

• It is required to open a bank account

• It makes financial decisions less daunting and can improve financial well-being

• It's only necessary for financial professionals

• It helps in making better investment decisions only

What is a key first step in building financial literacy?

• Investing in the stock market

• Learning to budget

• Applying for every credit card offer

• Buying a house

What does a good credit score affect?

• How many bank accounts you can open

• Your ability to get a library card

• The quality of financial advice you receive

• Your ability to buy a house, lease a car, and apply for credit cards

What is recommended to keep your credit utilization ratio at or below?

• 10%

• 50%

• 30%

• 75%

What can saving help you with?

• Only retirement

• Getting a higher credit score

• Paying off debt while saving for future needs

• Winning the lottery

What is a benefit of becoming financially literate?

• Being able to manage debt more effectively

• Avoiding all financial risks

• Never having to pay taxes again

• Having unlimited credit

What is a method of budgeting mentioned?

• The no-budget method

• The spend everything method

• The 50-20-30 method

• The 100% method

What might you use to monitor your credit score?

• Checking your bank balance

• Asking friends to guess

• A crystal ball

• CreditWise from Capital One

What is a wise step when taking on debt?

• Ignoring the interest rates

• Taking on as much as possible

• Establishing a plan for repayment

• Only using credit cards