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Biblical Literacy ✔ Financial Literacy? Test Yourself!

Most clergy pride themselves on being biblically literate.  We realize that biblical literacy is not a one-shot affair; we continue to dedicate time and energy to scriptural study throughout our careers.  

But financial literacy?  For most Americans, it’s not a consideration according to a recent article in Forbes magazine that indicates just four in seven Americans can be categorized as ‘financially literate,’ and only 24 percent of millennials understand basic financial concepts. Too often, the article finds, not taking control of their personal finances results in unmanageable debt, financial hardship, and insufficient savings for retirement.1

Take a few minutes to test your financial literacy. 

1. The first step in Financial Planning is to develop your financial goals.

           ___True                 ___False

2. What percentage of your income should you be saving towards retirement at age 30?

a) 20%     b) 15%     c) 12%     d) 5%

3. Natalie and Jackson are recent seminary graduates serving the church. At 25, Natalie starts saving $4,000 each year in her 403(b) retirement plan but stops making new contributions after 10 years. Jackson waits 10 years until age 35 to start making contributions, but then saves $4,000 a year for each of the next 30 years. They each earn an average of 8% annually on their investments. Both retire at 65. Who has the bigger nest egg?


a) Natalie
b) They both have about the same
c) Jackson

4. What is an index fund?

a) any mutual fund
b) a fund that mimics the performance of a select group of stocks or bonds
c) an actively managed fund
d) none of the above

5. If you are younger than 50, what is the maximum amount that you will be able to contribute through salary deferral to your 403(b) retirement plan in 2023?

a). $8,000     b). $12,000     c). $22,500     d). $18,000

No matter how you score, you can benefit by increasing your financial literacy. To learn more about financial planning and investing, visit https://www.mmbb.org/personal-finance/why-work-with-a-financial-planner or contact us at 800.986.6222 or [email protected]. We are here to help you build financial wellness and plan for a sustainable retirement. 

 

Answers below: 

  1. True. In order to map your financial journey, you need to know where you are going. MMBB Financial Services views goal setting as a critical step in achieving financial well-being.  Once the goals are set, our Financial Planning Specialist can work with members to establish savings targets and an investment strategy.  It’s also critical to review your progress at least one a year to make sure you are on track.
  2. C. Experts recommend that you aim for a ‘target savings goal of 15% regardless of your age. However, most people in their 20s and 30s are probably not able to save that much, but your goal should be to increase your savings rate by 1% each year until you reach your target savings rate. Contributions made by your employer on your behalf are counted toward that goal.  If you are behind, get started now by determining how much you can save each month.  rate.
  3. A. Natalie comes out ahead, thanks to the magic of compounding interest. Even though she stopped contributing after only ten years, her money will grow to about $130,000 more than Jackson’s ending balance.
  4. B. An index fund is an investment fund designed to duplicate the performance of a given market index of stocks or bonds such as the Standard & Poor’s 500 (S&P 500). It is a passively managed fund since the index fund includes all of the investments in the index.
  5. C. Those under age 50 will be able to contribute up to $22,500 to a 403(b)-retirement plan in 2023. If you are age 50 or over, the IRS provides for a catch-up contribution up to an additional $7,500.

 

1. https://www.forbes.com/sites/stopaward/2022/02/03/a-hand-up-or-a-handout-can-we-tackle-americas-financial-literacy-crisis/?sh=7a5cfe74e251

 

The information contained herein is for informational purposes only.  While MMBB made every attempt to ensure that the information is accurate, MMBB is not responsible for any errors or omissions or the results obtained from the use of this information.  MMBB is not liable for any success or failure that is directly or indirectly related to the use of the information contained herein.  The information contained herein does not constitute any financial, insurance, investment, legal, or tax advice.  In no event shall, MMBB and/or its fiduciaries, directors, officers, employees, or agents thereof be liable for any special, direct, indirect, consequential, or incidental damages or any damages whatsoever, whether in action of contract, negligence or tort, arising out of or in connection with the use of the information contained herein.

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