How Financially Literate Are You, Really? These 7 Questions Will Tell You
Do you understand how money really works?
Not just how to make it but how to protect it, grow it, and avoid the traps that keep too many people stuck in a cycle of debt and uncertainty.
At Level Africa, we believe that financial literacy is the first step to building financial freedom. Below are 7 simple but powerful questions that can help you assess how ready you are to take control of your money.
Most people get these wrong. Will you?
1. How Fast Can Debt Trap You?
When you take a loan from a credit card or digital lender, interest starts building right away. But do you know how fast that debt can grow?
Question:
You owe $1,000 at 20% annual interest, compounded yearly. If you don’t pay anything, how long before your debt doubles?
- A) Less than 2 years
- B) 2–4 years
- C) 5–9 years
- D) 10 or more years
Correct answer: B) 2 to 4 years
Why it matters:
At 20% interest, your unpaid debt doubles in just a few years. This is how people fall into financial traps without realizing it. Compound interest works both ways and in this case, it’s working against you.
What you can do: Prioritize paying off high-interest debt before focusing on saving or investing.
Learn how compound interest can double your debt faster than you think
2. Is Inflation Eating Your Money?
Saving is smart but not if your money is slowly losing value.
Question:
Your savings earn 1% interest, but inflation is 2%. After one year, can you buy:
- A) More than today
- B) The same as today
- C) Less than today
- D) Don’t know
Correct answer: C) Less than today
Why it matters:
If your money isn’t growing faster than inflation, you’re losing purchasing power. That means you’ll be able to buy less next year with the same amount of money.
What you can do: Use Level Africa to invest in products that aim to beat inflation like government bonds or fixed income deposits.
Explore why your savings might be losing value every day
3. Do You Understand Compound Interest?
This is how money grows when you leave it to work over time but do you know how much difference it really makes?
Question:
You invest $1,000 at 10% annual interest for 7 years. No withdrawals. How much do you have at the end?
- A) $1,500
- B) $1,700
- C) $2,000
- D) $3,000
Correct answer: C) $2,000
Why it matters:
Compound interest means your interest earns interest. That’s how people with consistent, long-term investments quietly build wealth over time.
What you can do: Start investing as early as possible, even with small amounts. Level Africa’s fixed income products and bonds are designed for consistent, compound-based growth.
See how compound interest quietly builds wealth over time
4. Should You Save While You Still Have Debt?
Many people are saving while still carrying high-interest debt. But does it make sense?
Question:
You have a loan at 20% interest and your savings earn 5%. What’s the smarter move?
- A) Keep saving
- B) Pay off the loan
- C) Do both equally
- D) Don’t know
Correct answer: B) Pay off the loan
Why it matters:
If your loan is costing you more than your savings are earning, you’re going backwards. Clearing high-interest debt is often the best investment you can make.
What you can do: Focus on debt repayment first, then build a habit of saving to invest.
Understand why paying off debt can sometimes be a better investment than saving
5. Are You Spreading Your Risk When You Invest?
Putting all your money into one informal investment, business, or savings scheme is common but is it safe?
Question:
True or False: It’s safer to put all your money in one place than to spread it across different investment options like unit trusts, bonds, and fixed income deposits.
- A) True
- B) False
- C) Not sure
Correct answer: B) False
Why it matters:
Diversification protects your money. When you spread your investments across multiple assets, the risk of loss is reduced. If one area underperforms, the others can help balance it out.
What you can do: Level Africa makes diversification easy by offering unit trusts, government bonds, and fixed income deposits all professionally managed to protect and grow your wealth.
Learn why diversifying your investments isn’t optional — it’s essential
6. Do You Understand What Small Interest Really Means?
Some people think 2% or 3% isn’t worth paying attention to. But small interest adds up.
Question:
You save $100 at 2% interest for 5 years. What do you have?
- A) More than $102
- B) Exactly $102
- C) Less than $102
- D) Don’t know
Correct answer: A) More than $102
Why it matters:
Even small interest can grow your money if left alone. But if your savings earn 0%, you’re missing out and probably losing money to inflation.
What you can do: Use Level to earn better returns than a typical savings account, while still managing your risk.
Discover how small returns, invested consistently, create long-term impact
7. Do You Know What Happens When Rates Rise?
When interest rates go up, it affects more than just loans. It also affects investments, especially bonds.
Question:
If interest rates rise, what usually happens to bond prices?
- A) They rise
- B) They fall
- C) They stay the same
- D) There is no relationship
Correct answer: B) They fall
Why it matters:
Bond prices and interest rates move in opposite directions. If you don’t understand this, you might panic or sell at the wrong time. That’s why timing and expert management matter.
What you can do: Use Level’s managed products to navigate interest rate changes without needing to be a market expert.
Understand how interest rate changes affect bonds — and what to do about it
Your Score and What You Do Next Does
If you got:
- 6 to 7 correct: You’re in great shape. Stay consistent.
- 3 to 5 correct: You’re on the right track. Keep learning and applying.
- Less than 3 correct: This is where your growth begins.
Financial literacy isn’t about having all the answers. It’s about making better decisions every day.
Ready to Apply What You’ve Learned?
At Level Africa, we help you act on what you know.
- Invest in unit trusts, bonds, and fixed income deposits
- Grow your money steadily over time
- Access expert management with no complicated setup
Start now at level.africa and build the future your knowledge deserves.