As much as you may hate to admit it, money makes the world go ‘round, and understanding how your money works (or doesn’t work) for you determines whether you’ll be along for the ride or left in the dust.
Knowing the basics – your income, expenses, debts and savings – is the first step toward taking control of your money and improving your financial well-being. In fact, if you’re like most people, learning basic money management skills today can help you take more control of your financial future.
A survey from the National Endowment for Financial Education shows that 76 percent of adults in the United States feel financial stress and nearly half (49 percent) of adults live paycheck to paycheck.[1] The good news is that according to National Financial Credit Counseling’s annual survey, 75 percent agree that getting answers to their financial questions from a professional would benefit them.[2]
Take this short quiz to see how much you know about money management and where you can improve, then explore additional resources with advice from PNC’s professionals to you help take control now and establish healthy financial habits.
1. As a rule of thumb, how much of your income should you expect to spend on living expenses?
a. 100 percent
b. 70 percent
c. 50 percent
d. 30 percent
2. True or False: If you want to buy a home, you need to have a 20 percent down payment.
3. If you invest $25,000 in a retirement account today, how much could it potentially be worth in 40 years, assuming an 8 percent annual average return?
a. Around $175,000
b. Around $250,000
c. Around $375,000
d. Around $550,000
4. True or False: If you consistently receive large tax refunds, you should consider adjusting your withholdings from your employer.
5. In addition to a will, what other documents should be included in your financial plan?
a. Advance medical directive
b. Durable power of attorney
c. Revocable trust
d. All of the above
6. When the market drops, what should you do?
a. Pull money out of your investments until the market is stable
b. Keep calm and call your financial advisor
c. Invest all of your available funds
d. Time the markets by buying assets that are doing well and reducing your exposure to assets that are declining
7. True or False: With a Roth IRA, contributions are made after-tax. With a Traditional IRA, contributions accumulate tax deferred until withdrawal.
8. Which of the following is true about permanent life insurance policies?
a. They accumulate cash value
b. They can provide a beneficiary with a death benefit
c. The premiums can be higher than for term insurance
d. All of the above
9. True or False: When you retire, Medicare will cover all of your medical expenses.
10. How long should you keep documents stating that you have paid off a loan, including student loans, auto loans and mortgages?
a. Six months
b. One year
c. Five years
d. Forever
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