What's your financial IQ?

A report by the FSA has exposed the shocking ignorance of millions of Britons when it comes to money. Find out if you're heading for early retirement or the bankruptcy courts with David Prosser's quiz


When was the last time you switched energy provider?

a) I change every six months to beat the price rises.

b) I did it once, a few years ago, but I should check the prices again.

c) Won't I have to have new pipes?

Are you still with BT?
a) No way, I've been making free calls using the internet for years.
b) Yes, but I should probably switch.
c) Isn't it still a state-owned monopoly?

Would you buy a brand-new car?
a) No. Depreciation wipes 20 per cent off the value as soon as you drive away.
b) Yes, but I use car supermarkets and the internet to get cheap deals.
c) Always. I like to impress by being the first with the latest registration.

Have you fitted your home with energy saving devices like insulation?
a) Of course, they cut my heating bills and I'm doing my bit for the planet, too.
b) I've got the odd low-energy light bulb, but I know I should do more.
c) I leave the telly on standby so I can use my remote, if that's what you mean.

Have you had a water meter fitted?
a) Yes - and we're having fewer baths so we can spend a bit extra on holiday.
b) I asked if it would be cheaper, but my water company never rang back.
c) Why would I do that? I already spend a fortune on Evian, thanks.

Do you ever haggle in shops?
a) Always. It's amazing how much you can save just by asking.
b) Ah, yes. Only last week I brought back a great rug from Marrakech.
c) No. It would make me look cheap.

Do you set a budget each month, and live by it?
a) I've got a spreadsheet on my mobile that I consult before I buy stuff.
b) I know roughly how much I have to spend and try not to go overdrawn.
c) Come on, if Gordon Brown can't balance the books, how will I manage?

When was the last time you changed bank?
a) A year ago, when the smaller banks started offering such good deals.
b) When my student deal finished.
c) Are you serious? They gave me a free moneybox when I was a kid!

Do you own your own home?
a) Naturally - and I'll have paid off my mortgage in a year or two.
b) I will do, in 20 years when I get the building society off my back.
c) Property is theft - that's why my landlord's in St Lucia.

Do you always file your tax return on time?
a) As soon as it arrives.
b) I may leave it to the last minute, but I've never filed it late.
c) Deadline? What deadline?

What do you think about store cards?
a) Pass the scissors. What a rip-off.
b) I've got the odd one, but I pay my bills on time to avoid interest.
c) They're brilliant, aren't they?

Where would you go to get financial advice?
a) I checked out my adviser's qualifications before signing him up - and he's independent.
b) My local bank offers advice, though I can't help noticing it always recommends its own products.
c) A copy of the Racing Post is the only investment I need, mate.

How often do you go overdrawn?
a) Never - didn't you read my answer to the budgeting question?
b) Occasionally, but I've arranged an interest-free overdraft buffer.
c) Hey, let's just say that my bank banks with me.

What rate does your credit card lender charge?
a) 0 per cent - and as soon as it charges, I change my card.
b) Less than 10 per cent a year.
c) I think it's about 20 per cent, but I've stopped opening the envelopes.

Does the amount you owe rise every month?
a) My mortgage is my only debt.
b) Not usually, unless I have to pay for something big, like a holiday.
c) I wish I'd listened when they explained compound interest at school.

Do you regularly pay one debt off with another?
a) Never, that's a downhill spiral.
b) Only in an absolute emergency.
c) All the time.

Do you ever miss repayments on credit cards or loans?
a) No, I pay by direct debit.
b) Occasionally, if I have a tough month.
c) Yes. Just like big companies.

Are you paying your mortgage lender's standard variable rate?
a) No. I change my mortgage every time my cheap rate ends.
b) I am, but I plan to get round to remortgaging as soon as possible.
c) I've no idea.

How much do you have saved in cash for emergencies?
a) Three months' wages.
b) A bit, in with the rest of my savings.
c) That's what credit cards are for.

Have you used your kids' child trust fund vouchers?
a) Of course, and I'm topping up the account with my own money.
b) I've opened the account, but kids are expensive and I can't save any more.
c) I think they're still underneath that pile of reusable nappies I bought.

Do you know what ISA stands for?
a) I use individual savings accounts every year to save tax.
b) Not sure. I don't think I've got one.
c) Can you give me a clue?

Is all your money tied up in property?
a) I've got a buy-to-let investment to spread my risks a bit.
b) Only my own home, but I should be able to downshift and make some money later on.
c) Now you're talking. That beach hut is going to pay for my old age.

Do you trade in stocks and shares?
a) All the time.
b) No, but I have put a few grand into professionally run funds.
c) My bookie offers better rates.

How's your long-term investment strategy progressing?
a) Pretty well. I've got a well-diversified portfolio and I know where I want to be in 10 years.
b) I've got money here and there, but I don't know what I'm doing.
c) What are you talking about?

If you or your partner died tomorrow, would your family cope?
a) Our insurance - five times our joint salary - will be a big help.
b) We've got a policy, but I'm not sure.
c) Anyone could fall under a bus. You can't live your life thinking that way.

If you or your partner couldn't work due to ill health, how would your family get by?
a) The income protection and health insurance would pay the bills.
b) We've got some insurance policies, but I've never done the sums.
c) It won't happen to us. We eat five portions of fruit and veg every day.

Is your home insurance up to date?
a) I've shopped around for the best deal and we're fully covered.
b) I've got insurance, but it's expensive and we may be underinsured.
c) It will be as soon as I find five minutes to make a few calls.

Do you buy annual travel insurance?
a) Yes. It's much better value than paying for a policy for each trip.
b) I've thought about it. But it's only a few quid each time anyway.
c) I like to take my chances - foreign hospitals can't be all bad, right?

Are your pets insured?
a) Of course.
b) They are after we had to shell out for Rover's last tummy upset.
c) Surely the NHS covers hamsters?

Do you own a shredder?
a) Yes.
b) Yes, but I don't always remember to shred my bank statements.
c) Sometimes I rip stuff up before chucking it away - won't that do?

How will you pay for your children's further education?
a) I've got savings earmarked to cover their fees and living costs.
b) I've got some money put by, but I'm not sure it will be enough.
c) I didn't flunk university just because of that part-time job, thanks.

Are you depending on investments to repay your mortgage?
a) Yes, and I regularly check to make sure they're on track.
b) Yes, and I must find out how they're doing.
c) My interest-only mortgage is all I can afford.

Have you joined your employer's pension scheme?
a) Absolutely - it's free money.
b) No, but I'm trying to save for the future in other ways.
c) Don't be daft, I'm sure the state will look after me.

Do you know what A-Day is?
a) It's the pension reforms the Government is introducing on 6 April.
b) Is it to do with pensions?
c) Are BA and The Face involved?

Will your children have to pay inheritance tax if you die?
a) No, I've cunningly organised my finances so they won't be affected.
b) Possibly, but I've briefed them.
c) The lazy sods should be grateful for anything they get.

Have you written a will?
a) Yes.
b) Yes, but it needs updating.
c) Who cares. I won't be around.

THE VERDICT

Mostly As: You're impressively cash-savvy and have an excellent all-round knowledge of personal finance. Just try not to let it develop into obsessive compulsive disorder.

Mostly Bs: There's plenty of room for improvement, but at least you're aware of your failings. Take action now, and you could be looking at early retirement.

Mostly Cs: Did you finish the questionnaire before the bailiffs arrived? If so, this could be your last chance to save you and your family from a lifetime of penury.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

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