How smart are you?

1.

Jess and her friend Anita move into an apartment together. Jess organises the electricity and gas for the apartment and puts the accounts in her name. Six months later they have a fight and Anita moves out and refuses to pay any of the bills. Can Jess make her pay them? A Yes

B No

2.

Sam has $3000 owing on his credit card at 16.5% interest. If he pays only the minimum amount due each month, as shown on the card statement, how long will it take him to pay off the whole amount?

A About 21 years

B About 4 years

3.

Alex has just completed major home renovations and her home is now worth 20% more than the amount it’s insured for. How much do you think it will cost to increase the amount of her home building insurance? A Alex will have to pay a small increase in her premium but not as much as 20% more.

B About 20% more, because Alex is getting 20% more cover.

4.

If Laura deposits $20 a week in a high-interest savings account with an interest rate of 4% for her newborn son, how much money would he have when he turns 21?

A About $34,000

B About $27,000

C About $21,000

5.

Assuming you own your own home, roughly how much of your current income would you need to live the same lifestyle in retirement as you do now?

A About 47% B About 67% C About 87%

6.

The greatest running cost of a new car is:

A Petrol and servicing

B Depreciation

C Registration

D Insurance

Answers: 1 (B) If the bills are in Jess’s name then she is solely responsible for paying them. She would need to take legal action to recover the money from Anita.

2 (B) If Sam only pays the minimum amount each month, the balance he owes will reduce very slowly and he will pay nearly $5000 in interest. 3 (A) If you want 20% more cover, it will not usually cost you 20% more in premiums – in fact, it can be significantly less. 4 (A) This is the power of compound interest. 5 (B) If you live on an above-average income and you own your home, you might need about 67% of your pre-retirement gross income to maintain your current lifestyle.

6 (B) Depreciation is the leading cost of owning a car.