23% of Americans Bombed This Money Quiz—Can You Pass It?
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Pop quiz, hotshot. Are you more financially savvy than the average American? Well, today, I'll be the George of that. According to a national survey, 23% of American adults missed 75% or more of these questions on a basic personal finance quiz. Confusing way to say it, survey people? I think you can do better. It's just like, uh...

Your opinion, man. Since I'm a man of the people, today I'm going to see if I can answer three of the toughest questions from that very quiz. And you'll also get to play along from home to see how your personal finance knowledge stacks up. Now, it's important to point out as we get started that this isn't some random quiz along the lines of BuzzFeed's latest hit, Make a Bowl of Pasta and I'll Reveal Your Soulmate's Initial. What? What does that mean? Am I a fusilli? Am I a carbonara?

Oh, it gets good. They even pair it with a drink. Am I a mineral water? I think I'm a Fusilli mineral water. I think we can all guess that. Soy boy beta. No, these personal finance questions come from the Personal Finance Index, which is an annual financial literacy survey produced by George Washington University in partnership with TIAA. Translation, we're dealing with legitimate academic stuff here. So...

Without further ado, let's hop in to the first question. Question number one. There's a 50/50 chance that Malik's car will need engine repairs within the next six months, which would cost $1,000. At the same time, there's a 10% chance that he will need to replace the air conditioning unit in his house, which would cost $4,000.

which poses the greater financial risk for Malik. Okay, let's think this through, guys. Think, think, think. It's like an escape room, but in my brain. All right, engine repairs, $1,000, 50-50 chance. So that's a 50% chance of $1,000. So I'm going to do 50% of $1,000, which is $500 for the expected cost. Hang with me, $500 on that one. Now, the air conditioning unit, 10% chance, and it's a $4,000 repair. So we're going to do 10% chance.

of $4,000, which would mean it's $400. So the greater financial risk as far as expected cost would be the engine repair of $500. That beats $400, $500.

Final answer. I'll wait for you guys. I know it's going to take you a little while. Two hours later. All right, you good? Answer, daily double. Despite the air conditioning repair potentially costing Malik $4,000, the likelihood of a $1,000 car repair is far greater, meaning it poses a more significant financial risk. One for one, baby. Don't call it a comeback. Now, at the end of the day, it doesn't really matter whether your HVAC or your car is more likely to break down. The important takeaway here is that...

that Malik needs an emergency fund because 40% of Americans have had an unexpected money emergency pop up in the last three months with a quarter of them dishing out over a thousand bucks of

So what do you need to do? Start by saving up a thousand bucks as a starter emergency fund. Then focus on getting out of debt. And once you're out of debt completely, finish the job by saving up three to six months of your typical expenses. That is your never go into debt again insurance plan. Shout out to my boy Malik. He's going through it right now. Prayer's going up. Start the GoFundMe. I'll support. Happy Sunday, everybody. God bless you. Stay prayed out.

Alright, question number two. I'm feeling pretty good so far, not gonna lie. Confidence sky high. Question number two. Anna saves $500 each year for 10 years and then stops saving additional money. At the same time, Charlie saves nothing for 10 years but then receives a $5,000 gift which he decides to save. If both Anna and Charlie earn a 5% return each year, who will have more money in savings

after 20 years. A lot of context needed here. What is the relationship between Anna and Charlie?

where did Charlie get this money? And why did he save nothing for 10 years, but then all of a sudden get rewarded with this $5,000 gift and decide, you know what? Now's the time to save. Not the question, but I do have more questions. So Anna saves 500 for 10 years. I already know the answer because Anna has a 10 year headstart and has 5,000 saved at that time. So compound growth with that 5% is already gonna give her more money. So final answer, Anna. Now let's get to some math.

I'm going to use my handy dandy investment calculator and let's do the numbers here. Let's say, say 20 years, right? Is it 20 years? Good for them.

So let's say they're 30 years old today. Anna invests for 10 years, 500 bucks. She has zero to start 500 by 12. Okay. That's $41 and 60 cents per month. Annual return of 5%. After 10 years, she would have $6,459. Thanks to that 5% growth. Now she lets that grow for another 10 years. So now we're going to do starting balance of six, four, five, nine from 40 to 50. Okay.

and see what she ends up with, investing zero after that. She'll end up with $10,638 at the end of that 20 years. Now, her counterpart, Charlie, waits and starts investing at 40, right? She got a 10-year head start. He starts at 40, and he just plops 5,000 bucks in there, doesn't add anything to it,

5% rate of return, he would have $8,235. So about two grand less than Anna. Bada bing, bada boom, I was right. Now, first of all, getting a 5% return on your investments is kind of terrible. With that low of a number, my guess is that Anna and Charlie are keeping their money in something like

a CD or bonds, which is a bad option for long-term investing. Not the moral of the story, but I needed to make it clear. The real takeaway here though, starting early makes a major difference in how much your investments grow over time. Because even though Charlie put in the same amount of money as Anna, five grand, her 10-year headstart gives her a big upper hand. And that's why you need to get out of debt and build that emergency fund ASAP so that you can start investing and give compound growth plenty of time to do its thing.

So there's the investment calculator numbers for proof. And the answer, Anna would have more money after 20 years than Charlie, considering her savings would have a 10-year head start to accumulate interest. Pencils down. Your boy is two for two, crushing it. Did you get it right? I hope so. Now we'll get to our third and final question in just a second. And I'm already starting to sweat because I think this one is a doozy. But first, I've got a bonus quiz question for you. What is the best way to make sure your personal info doesn't fall into the wrong hands online? Is it

A, do nothing. B, spend hours doing it yourself. Or C, sign up for Delete.me. You guessed it, option C. I personally use Delete.me because they comb through hundreds of data broker sites to clean up my digital footprint. And that's a big deal since online spammers and scammers can use your personal info to make you an easier target for phishing attacks and other types of internet scams. So get started today and take control of your digital privacy with a 20% off discount by going to join delete.me.com slash George or click the link in the description below. Okay.

Back to the quiz. Time for our final question. Jose owes $1,000 on a loan that has an interest rate of 20% per year compounded annually. If he makes no payments on the loan at this interest rate, how many years will it take for the amount he owes to double? Possible answers, less than five years, five to 10 years, more than 10 years, or don't know. How is don't know even a response on this quiz? Just take a guess, guys. You get a one out of three chance. This is ridiculous.

All right. The way I would answer this is to calculate the interest. You could use a loan interest calculator. I'm going to do it by hand. And by hand, I mean digitally with the calculator on this handy dandy MacBook. So $1,000, 20% interest. He's not making payments at all. So 20% of $1,000 is $200. So that's year one, he's paying $200. Now that $200 gets added to the balance. So now he's at

$1,200 in year two. So 1,200 times 20% APR, that's 240 bucks now added to the balance. So now if you're doing the math at home, we're at 1,440. So 1,440 times 20% is 288. So we're going to add the 288 plus the 1,440. We're at 1,728 and this is year four.

at this point. So 1728 times that 20% interest is another 345. 60 plus the 1728, $2,073, which is double his balance at year four. So technically just under four years, it would take to double. And let's see the answer. Am I correct? If your answer to the third question was less than five years, you would have been among the respondents who answered it correctly. Without making payments on his car loan, Jose's loan balance would double within four years.

Am I a genius? Some say. Jury's still out. Now, based on this ridiculous interest rate, my guess is that Jose's loan either came in the form of credit card debt, a personal loan, or one of those buy here, pay here type car loans. Regardless of what type of debt our homie Jose is dealing with, the overall takeaway is clear. Interest

sucks. Whether it's 5% you're paying or 20%, this is the dirty little secret of debt. You feel like you're making easy payments every month or making no payments at all apparently, when the reality is you are being robbed blind by the interest, which is why I live by a simple mantra.

If we can't afford it in cash, we can't afford it at all. Because not only does paying cash keep you from being tied down by monthly payments, it's also a whole lot cheaper in the long run. So remember this, wealthy people earn interest, broke people pay it. So let's lean toward the wealthy side and get better with money. Now, if you missed one or more of these questions, you're definitely not alone because 23% missed 75% or whatever the survey people said.

You're not a dummy. These are weird questions that lean common core math more than they do real life. People with low financial literacy are six times more likely to struggle making ends meet. They're five times more likely to lack an emergency fund, and they're three times more likely to be unable to handle an unexpected $2,000 expense. And get this, the National Financial Educators Council found that the average adult loses $1,389 per year just from not knowing basic money skills.

So what can you do to avoid a similar fate? Three things. First, this one's obvious, get educated. And hey, you're already doing that by watching this channel. But don't let it stop here. Read a good book. I'm biased, but I wrote a book called Breaking Free from Broke that will give you all the financial literacy you may have missed out on as a child or as an adult. And if you're more of a sensory learner, you can also get it as an audiobook read by me, myself, and I.

I'll drop a link in the description if you want to check the book out. Next up, you've got to have a plan. Don't just wander around aimlessly like a college freshman wearing a lanyard and crippling self-doubt. Instead, set goals and stick to them. You could make a plan to get out of debt, make a budget, build an emergency fund, start investing consistently for retirement, or

anything else. Now we call those the baby steps around here and they're in order with focused intensity. And it's the exact plan that I follow to get out of debt and build wealth. So if you want a deeper dive on that, I will leave another link in the description to a free assessment that gives you a personalized next step for your exact money situation. Now, finally, the last step, take action.

action. Knowledge without action won't change your life. So once you set some goals, get to work. And if this quiz exposed some gaps in your money knowledge, that just means you know where to focus. Because at the end of the day, financial literacy is not just about memorizing facts. It's about learning how to make wise decisions with your money. And if there's one thing I've learned about personal finance, it's this. Personal finance is 80% behavior and only 20% head knowledge. Your actions and habits are way more important than nerding out on some math problems.

problems. And the sooner you get these healthy habits in place, the sooner you'll be earning interest instead of paying it. If you want a good place to start sharpening your skills, keep watching this next video where I break down nine ways you may be losing money without even realizing it. I'll also leave a link in the description below. Thanks for playing along today. Let me know in the comments how many questions you got right, and I'll see you real soon. Love you.