It’s more important than ever to have the financial literacy skills needed to manage your money and investments wisely.

To help Canadians find the resources they need, a coalition of seven non-profit organizations have joined together to organize this November’s Financial Literacy Month. What better time to take a quick quiz to test your knowledge of a few key financial terms?

Financial literacy quiz

Select which statement you think best answers each of the following questions:

1. What is your FICO score?

  • a. A score of your creditworthiness as determined by Fair, Isaac and Company.
  • b. A score lenders use to determine your ability to repay loans.
  • c. A score lenders use to set the interest rate you will be charged on a loan.
  • d. All of the above.

2. What is the usual “monthly minimum” payment on a credit card statement:

  • a. The total outstanding balance owing on the card as of that month.
  • b. 1% or 2% of the outstanding balance, plus finance charges and fees
  • c. 10% of the outstanding balance.
  • d. 5% of the outstanding balance

3. How much can you contribute to a Registered Education Savings Plan (RESP)?

  • a. Up to $2,000 per year.
  • b. Up to $2,500 per year.
  • c. Up to $5,000 per year.
  • d. You may contribute as much as you want each year up to a maximum lifetime limit of $50,000 per child.

4. Do you pay tax on the earnings on investments held inside a Registered Retirement Savings Plan (RRSP)?

  • a. Yes, the same rules apply to registered and non-registered investments.
  • b. Yes, but you only pay tax on the earnings when you withdraw the funds.
  • c. No, you only pay tax on contributions that are above your annual allowable limit.
  • d. No, the earnings are tax-free.

5. How much can you contribute to a Tax-Free Savings Account (TFSA)?

  • a. Up to 5% of your annual income per year.
  • b. Up to 15% of your annual income per year.
  • c. Up to $10,000 per year starting in 2015 ($5,500 per year, 2013-2014; $5,000 per year, 2009-2012).
  • d. Up to $500 per year.

6. What is a holographic will?

  • a. A will that covers a whole estate.
  • b. A will that is entirely handwritten.
  • c. A will that divides an estate into two equal halves.
  • d. A will that is created online.

7. What is a benefit of contributing to your employer’s retirement savings plan?

  • a. Your contributions can be automatically deducted from your pay cheque.
  • b. You benefit from immediate tax savings.
  • c. Your employer may match a percentage of your contribution.
  • d. All of the above.

8. What are capital gains?

  • a. Income earned in a given tax year.
  • b. Profits on the sale of investments.
  • c. Interest paid on guaranteed investments.
  • d. Annual pay increases.

9. What is term insurance?

  • a. Life Insurance that terminates at age 90.
  • b. Life Insurance that provides lifelong protection.
  • c. Life Insurance that provides protection for a fixed annual payment for a given number of years.
  • d. Life Insurance designed to cover you for the term of your mortgage.

10. What is a payout annuity?

  • a. An annual dividend payment.
  • b. An annual interest payment.
  • c. An annual income tax refund.
  • d. A way to convert savings into regular income payments.

Now, compare your answers against the correct answers below to determine your financial literacy score.

Answers: 1-d, 2-b, 3-d, 4-b, 5-c, 6-b, 7-d, 8-b, 9-c, 10-d

Scored 10 out of 10? Congratulations! You are well on your way to a sound understanding of financial terminology. Got a few answers wrong? Don’t worry. It’s easier than you think to get the information you need to make wise financial decisions. Discover the value of financial advice.

  • The road to financial security starts with action: Get going with our Bright Start tool.