The OECD Money Test: 7 Questions, 2 That Most Adults Miss

Intro

Here's a money test the OECD gave adults in thirty-nine countries and economies. Seven questions, and the official answers. Keep score as we go. By the end, you'll know where you stand, and the one idea most people miss.

On average across those countries, half of the adults got at least five of the seven right. The OECD calls that the minimum target. Let's see if you clear it. The survey covered 68,826 adults aged eighteen to seventy-nine.

Waiting For $1,000

Question one. Five brothers will get a gift of $1,000 in total, to split equally. They have to wait one year for their share, and inflation stays at, say, 3%. In one year, will their share buy more than today, the same amount, or less?

Less. The money waited, and prices didn't. And this is where people split: on average, only 63% of adults got this one. Every percentage in this video is an average across the thirty-nine countries and economies.

Here's the twist. In the same survey, 84% on average knew what high inflation means. Fewer could apply it to their own money.

The $25 Loan

Question two. You lend $25 to a friend one evening, and they give you $25 back the next day. How much interest have they paid on this loan? Zero.

They paid back exactly what they borrowed. Most adults got this one: 83% on average. If you like testing your money knowledge against the official numbers, subscribe. That's what this channel does.

100 At 2

Question three. Someone puts $100 into a savings account with a guaranteed interest rate of 2% per year. No fees, no taxes, no more payments, no withdrawals. How much is in the account at the end of the first year?

$102. 2% of 100 is two. Simple, right? Yet on average, 49% of adults got it.

Fewer than half.

Five Years Later

Question four, the one most people miss. Same account, same 2%, with the interest left in the account each year and no fees or taxes. After five years, is it more than $110, exactly 110, less than 110, or impossible to tell? More than 110.

Each year's interest earns interest too. For scoring, the OECD only counts this one if you also got question three right. Here's the math. 100 becomes 102 after one year.

After five, about $110 and forty-one cents, by our math. More than 110. The OECD's own summary: on average, only 42% of adults can correctly answer the question about compound interest. Forty-one cents looks small.

But it's the same rule that makes savings grow faster the longer they stay put.

High Return

Question five. True or false: an investment with a high return is likely to be high risk. True. Higher possible rewards usually come with higher possible losses.

77% on average got this one.

What Inflation Means

Question six. True or false: high inflation means that the cost of living is increasing rapidly. True. This was the easiest one: 84% on average got it.

Many Baskets

Last question. True or false: it is usually possible to reduce the risk of investing in the stock market by buying a wide range of stocks and shares. True. Spreading money across many shares lowers the risk that one bad company sinks it all.

59% on average got it. Here are the OECD's words for questions five and seven: 77% understood risk and return, and 59% understood the importance of diversification in reducing risk.

How Everyone Did

Now count your points. Here's how adults did on each one, from the easiest to the hardest. The two questions about interest on savings are at the bottom. The math of how savings grow is the idea most people miss.

Five or more out of seven? You reached the OECD's minimum target. On average, half of the adults did. Among the participating OECD countries, 58% did.

And it isn't just a quiz. In the same survey, adults who reached the minimum target on overall financial literacy also scored higher on financial resilience, by twelve points out of 100, after taking their socio-economic characteristics into account. So, what's your score out of seven? Tell me in the comments.

And if question one surprised you, the next video compares seven places to keep money when prices rise, with the official numbers.