Financial Knowledge Assessment Q1A
1. It is January 1, 2017, and your bank tells you that the interest rate on your savings account is 2% for 2017 and the projected inflation rate for 2017 is 3%. At the end of 2017, would the money in the account buy more than it does today, exactly the same as it does today or less than it does today?
- A. More than it does today.
- B. The same as it does today.
- C. Less than it does today.
- D. I don't know.
Explanation: The correct answer is “C. Less than it does today.” Here, the projected inflation rate will outpace the interest rate. This means that your money, one year from now, will not have as much value as it does on 1 Jan 2017. This does not mean, however, that because your money is worth more now, that you should spend it all. Saving is still the right answer. However, placing your money in a savings account is not the only way to save money. Marines can receive financial counseling free of charge from a myriad of organizations. Visit the Finance Page of the Marine Corps Leadership Development (MCLD) website for more information.
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