Are You More Financially Adept Than A 5th Grader?

financial quizThis is a question that Chicago Tribune columnist Gregory Karp asks in his latest column while giving the following quiz:

1. You desperately want a new baseball glove that costs $50 but you only have $30 saved. What should you do?

A) Wait until you save $20 more from weekly allowances.

B) Borrow money from your parents at 18 percent interest and buy it now.

C) Sell part of your Pokemon card collection on eBay for $20 and buy it now.

2. “Opportunity cost” refers to the chance to pay less.

True or false?

3. If your allowance is $5 a week, and you already have $150 saved, how many more weeks will it take to buy a $250 video game system?

A) 20 weeks

B) 15 weeks

C) It depends

4. At th

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[Continue Reading at SavingAdvice.com]

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3 Responses to Are You More Financially Adept Than A 5th Grader?

  1. ben says:

    I’m sure that I will fail this test when the answers are available because I think the questions were poorly worded. My choices on some are not what I think the correct answer would be on the quiz, but are correct the way things are worded. Here are my answers with explanation:

    1. You desperately want a new baseball glove that costs $50 but you only have $30 saved. What should you do?

    B) Borrow money from your parents at 18 percent interest and buy it now.

    I know I’m going to get flack for this one, but here is my reasoning. “Desperately” to me says that there is a big event coming up in a day or two where the glove is needed. Ebay would take a week or more before it could be purchased. While 18% sounds terrible, it comes to less than a dime for the week on $20 so I could have my glove for the big event, pay off my parents in a week when the pokemon cards sold for the cost of an extra dime.

    2. “Opportunity cost

  2. Cassandra says:

    Here are my thoughts:

    1. A. For me, even if I want something “desperately” I still don’t really need the item. The answer can depend on the person though.

    2. False.

    3. A. To me, I assumed that the person wasn’t putting the money in a bank but instead keeping it in a jar or something similar. If you need $100, 5 divided into 100 is 20.

    4. Penny doubled.

    5. True. I also think saving is spending- you’re spending the money on itself.

    6. B. I assumed that the question meant you received cash $50 one year and the next $60 and it was just asking what the percentage increase on the cash gifts was.

    7. All of the above. If I was making a big purchase (which to me is like a laptop, car, etc.)I would all of the above.

    8. False. It might be different decisions, but they’re stil makingl decisions.

    9. A.

    10. False.

    Bonus. A. I thought that the person would save $5 dollars/week, while having their parents contribute $5 each week. That’s $10/week, or 10 weeks. If they saved the rest of their allowance, $10, their parents would give them another $5/week for a total of $25/week. In 4 weeks they would have $100.

    I agree with Ben, the questions were worded poorly.

  3. Dy says:

    1. Ideally A, but if it’s dire… hit the parents up for a loan. B)

    2. False, it’s what you give up when purchasing one thing over another.

    3. A) 20 weeks – simple math if you are keeping the money in a mattress.

    4. Take a penny doubled every day. I don’t remember the numbers, but it’s the power of compound interest… astronomical

    5. True, saving is a spending decision. You decide to spend the money into savings. It can be part of a budget.

    6. Unless I’m missing something… B) 20 percent – simple math.

    7. A) Evaluate whether it is a need or a want.
    Ideally, when making important purchases, you want to do all three choices to come to the best conclusion, but if you don’t need it… it’s really moot.

    8. False, EVERYONE needs to make decisions about what they can afford.

    9.A) Check. The money gets pulled from your account when you use the card.

    10. False ,setting goals and saving moneycan be, but not necessarily.

    Bonus question:
    A) 4 weeks – The first $5 is matched for $5 more, $10 total. The remaining $10 is matched with 5, $15, total. $25 total per week max. $100 in 4 weeks.

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