Are you Financially Literate? Take this Simple 3-Question Test to Find Out

Financially Literate

You might be surprised at how little you actually know. But...are you ready for the challenge?

Ever felt super confident in your seemingly worldly knowledge of random facts, only to be thwarted by how absolutely terrible you’ve done at your local Pub Quiz? Hate to break it to ya, but you’ll probably have the same epiphany dawn over you when asked these three financial literacy questions. But who knows? Perhaps you’ll ace them.

Created by Annamaria Lusardi and Professor Olivia S. Mitchell, this financial literacy test has now been used in more than 20 countries to measure financial knowledge. The “Big Three”, as they’ve come to be known, can reveal a lot more about your understanding of finances than you may realise. Ready for the challenge? Here goes:

1. Suppose you had £100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow?

  • a) More than £102
  • b) Exactly £102
  • c) Less than £102
  • d) Do not know
  • e) Refuse to answer

2. Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, how much would you be able to buy with the money in this account?

  • a) More than today
  • b) Exactly the same
  • c) Less than today
  • d) Do not know
  • e) Refuse to answer

3. Is this statement true or false: “Buying a single company’s stock usually provides a safer return than a stock mutual fund.”

  • a) True
  • b) False
  • c) Do not know
  • d) Refuse to answer


The first question measures numeracy, or the capacity to do simple calculations related to compound interest rates. The second question measures your understanding of inflation, again in the context of simple financial decisions. And the third question gauges your knowledge of risk diversification.

Are you ready for the answers? HERE!

How did you do on these?! We want to know!

Photo by Sebas Ribas on Unsplash.