You sweat the extra pounds, eat around the calorie-filled holidays, even time your steps with a newfangled fitness watch. But are you financially fit?
Your financial fitness is not as simple as having an extra few hundred bucks in your checking account and all your bills paid up. That’s a great place to be at 20 years of age, but not at 30 or 40.
Take this easy financial fitness quiz and see if your money life is on track. (Hint: In every case, “C” is the wrong answer):
1. Do you have a 401(k), IRA or other tax-deferred plan through your work?
A. Yep, and it’s funded to the max!
B. I opened it, but I just put in a little, whatever the default is.
C. I might have missed that meeting with human resources.
2. Do you have enough money in the bank right now to pay your bills for the month?
A. Easily, plus the next four to five months if I stretch a little.
B. Maybe? I’d have to check, but I’m confident no bills will go unpaid.
C. I probably don’t have enough cash to buy food for the next week. But I have a credit card, so no problem!
3. Speaking of credit cards…is your credit rating good, bad or ugly?
A. I have “good” or “excellent” credit, no late payments ever and check my credit report at least annually.
B. I’m working on my creditworthiness, but it has been a struggle in the past. I should check it more often, I suppose.
C. Next question, please.
4. If I had a surprise medical cost or other financial emergency tomorrow, I would pay for it by:
A. Dipping into savings with room to spare.
B. Some savings, but maybe borrowing against my home.
C. Hitting up friends and family, maybe letting the bills ride in the meantime.
5. My idea of “enough” for retirement looks like:
A. Social Security plus income from my retirement savings prudently invested for the long run to produce income that matches my realistic cost of living.
B. I plan to work past 65, but mostly that’s to make sure my plan will work out.
C. I will not retire. I have made my peace with that fact.
6. If something happened to me tomorrow, my loved ones can expect:
A. To receive an insurance check that should make up for a decade or more of my lost income.
B. Burial coverage through my work and whatever Social Security will pay out to them.
C. To have to hire a CPA to untangle my accounts and help them figure out how much debt they’re in.
7. My idea of the purpose of money is:
A. Freedom from stress and worry. Truly a means to an end, not just means in the financial sense.
B. To pay for things, since things are the most reasonable measure of wealth.
C. I’ve never thought about it. Money doesn’t stick around long enough for me to have an opinion.
If it isn’t obvious yet, the better choices here are “A” down the board. If you find yourself split between “A” and “B” on your responses, focus on the weak spots and build up your knowledge.
If you’re a solid “C,” time to get cracking and perhaps hire a financial planner to help.