Money Myths Quiz

Test your knowledge with 20 multiple-choice questions. Each question includes a detailed explanation.

Question 1: Do you need at least $5,000 to start investing?

Stories about needing thousands to start come from an older investing era when funds and brokers required large minimums. Modern brokerages, fractional shares, ETFs, and automated contributions let novices begin with very small amounts and learn the mechanics before scaling up.

Yes — most investments require $5,000 or more.
No — you can start with much less using fractional shares or low-cost funds.
Only if you want to diversify.
Only if you use a robo-advisor.

Answer: Correct! Keep Going!

Question 2: What is true about emergency funds?

Three months expenses is a simple target for an emergency fund, but the ideal size varies with job stability, dependents, and access to credit. The funds purpose is resilience, not to cover predictable recurring shortfalls.

They should only be used for true, unexpected emergencies.
They’re best for paying regular monthly bills forever.
They must always equal exactly three months of expenses.
They should be invested aggressively for growth.

Answer: Correct! Let's Go!

Question 3: A $9.99 monthly subscription costs about how much per year?

Small recurring charges feel trivial but add up; converting monthly prices into annual totals exposes the real cost and helps prioritize choices.

About $50
About $120
About $240
Less than $60 if you cancel occasionally

Answer: Correct! Nice Job!

Question 4: If you left a $5,000 credit-card balance unchanged at 18% APR for one year, roughly how much interest would accrue?

Interest rates on revolving debt are expressed as APR; seeing percentage dollars makes debt cost real and motivates repayment.

About $90
About $900
About $1,800
Zero if you avoid late fees

Answer: Correct! Keep Going!

Question 5: Which is a better budgeting approach?

Budgets fail when theyre unrealistic; the practical goal is a plan youll actually follow that shifts behavior over time.

A perfect, strict budget you never follow.
No budget at all and hope for the best.
A simple budget you consistently follow.
A budget that changes daily.

Answer: Correct! Let's Move On!

Question 6: High-yield savings accounts typically provide returns that are:

High-yield savings accounts offer better rates than basic savings but are still cash-like and differ fundamentally from long-term investments.

Comparable to long-term stock-market returns.
Higher than investing in stocks.
Higher than basic savings accounts but lower than typical long-term stock returns.
Always guaranteed above inflation.

Answer: Correct! Keep Going!

Question 7: Is paying only the credit-card minimum a safe long-term strategy?

Minimum payments avoid late fees but often barely dent principal, extending repayment and increasing total interest paid. This is a realistic scenario many face monthly.

Yes, if you always pay on time.
No — it increases total interest and prolongs payoff.
Yes, if your credit score is already perfect.
Only if the card has 0% APR forever.

Answer: Correct! Nice Work!

Question 8: Turning on autopay primarily does what?

Autopay reduces late payments but can hide unused subscriptions; pairing autopay with periodic audits is best practice.

Makes late fees less likely by automating payments.
Guarantees you’ll never be overcharged.
Automatically cancels unused subscriptions.
Eliminates the need to check statements.

Answer: Correct! Keep It Up!

Question 9: Which statement is correct about APR vs APY?

APR and APY are easy to mix up; APY includes compounding while APR often does not, so comparisons need care.

APR and APY always equal the same number.
APY accounts for compounding and can be higher than APR.
APR always includes compounding while APY does not.
They are interchangeable on loan offers.

Answer: Correct! Stay Strong!

Question 10: When should you prioritize contributing to get an employer match?

Employer matching in retirement plans is commonly called free money because it immediately increases your savings on matched contributions. Capture the match before other non-essential moves.

Never — employer match is a marketing trick.
Only after maxing out taxable accounts.
Generally as an early priority, at least enough to get the full match.
Only if you plan to retire within a year.

Answer: Correct! Halfway There!

Question 11: Which is the best rule of thumb for credit utilization?

Credit scores are driven by factors like payment history and utilization. Small balances can be neutral or even helpful, but only when utilization stays low and payments are on time.

Keep utilization below about 30% (ideally under 10%).
Always carry the maximum balance to build credit.
Avoid using cards at all costs.
Carrying any balance always hurts your score.

Answer: Correct! Keep Going!

Question 12: Which best describes $200/month invested at a modest rate?

Small monthly investing amounts power long-term growth, but substantial depends on timeframe; clarity about horizon matters when evaluating results.

Useless — it never grows meaningfully.
Potentially powerful over decades but modest in the short term.
Guarantees millionaire status in 5 years.
Only useful if invested in single stocks.

Answer: Correct! Let's Go!

Question 13: What’s the practical difference between deductions and credits?

Deductions reduce taxable income; credits reduce tax owed directly. Confusing them leads to overestimating benefits.

Deductions reduce tax owed dollar-for-dollar; credits reduce taxable income.
Credits reduce tax owed dollar-for-dollar; deductions reduce taxable income.
They are the same thing with different names.
Deductions are always better than credits.

Answer: Correct! Nice Job!

Question 14: Which best describes refinancing’s likely outcome?

Refinancing and balance transfer claims often omit fees and term changes; a break-even calculation is essential before proceeding.

It always saves money.
It can save money if fees and term changes are outweighed by lower interest.
It always costs more in fees than it saves.
It eliminates the loan principal immediately.

Answer: Correct! Keep Going!

Question 15: Which rule helps choose between Roth and Traditional retirement accounts?

Roth vs Traditional is fundamentally about tax timing: pay tax now (Roth) or later (Traditional). The best choice depends on expected future tax rates and personal goals.

Always choose Roth; it’s always best.
Always choose Traditional; taxes are lower later.
Choose based on whether you expect higher or lower tax rates in retirement.
The accounts are identical for tax purposes.

Answer: Correct! Let's Move On!

Question 16: A balance transfer will always reduce your total interest costs if:

Balance transfers with 0% promos can help if you can repay during the promo, but transfer fees and post-promo APRs matter.

You ignore the transfer fee.
You pay off the balance during the 0% promo and the fee is smaller than interest avoided.
You extend the term indefinitely.
You make only minimum payments.

Answer: Correct! Keep Going!

Question 17: If a checking account advertises “no monthly fee,” that means:

No-fee accounts can still have indirect costs low interest on balances, ATM or overdraft fees, or usage conditions so total cost depends on behavior.

It is always the cheapest option for everyone.
There may still be indirect costs depending on usage.
It pays the highest interest on balances.
It never charges ATM or overdraft fees.

Answer: Correct! Nice Work!

Question 18: Which statement about deposit insurance is generally true?

Many jurisdictions provide deposit insurance protecting qualifying deposits up to a statutory cap, which is useful for safety and short-term cash placement.

It guarantees all investments including stocks and mutual funds.
It often protects qualifying bank deposits up to a set limit.
It eliminates the need for diversification.
It covers cryptocurrency holdings.

Answer: Correct! Keep It Up!

Question 19: Saving $100 per month at a modest annual return is likely to:

Compound interest makes small regular savings effective over long horizons; the earlier you start and the longer you invest, the greater the compounding effect.

Stay exactly $100 × months saved and never grow beyond contributions.
Grow modestly in the short term but substantially over decades due to compounding.
Lose value because of fees only.
Be worse than keeping cash under a mattress.

Answer: Correct! Stay Strong!

Question 20: Closing a long-standing paid credit card will always improve your credit score.

Closing old credit accounts may lower your average account age and reduce available credit, which can raise utilization and sometimes lower your score, so the decision should be deliberate.

Yes — it always improves your score.
No — it can lower average account age and raise utilization, hurting score.
Only if you close all your cards at once.
Only if the card has a zero balance.

Answer: Correct! Click Below for Reward!

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