Stumbled across another cool money test and couldn’t pass it up :)
My friend Laurie came up with this for WellKeptWallet.com, and while it looks like it’s two years old now I’m sure enough fun will be had… Especially as I’m pairing it with ANOTHER test too that we once ran on this site (“20 Signs You Need a Financial Makeover“) so I hope you’re in for some good cross-examination this morning! Haha…
We’ll start with the more positive test first…
20 Signs You’re Financially Stable:
- You’re at peace with your money situation. Yup, more or less.
- You don’t fight about money with your spouse. Thankfully!
- You don’t use your credit cards often, or if you do, you pay them in full every month. We put everything we can on our card to get the cash back and to budget easier, but then we pay it all off at the end of each month.
- You’ve got a fully stocked emergency fund. Fail.
- A job loss wouldn’t mean you couldn’t pay your bills. Truth. For a little bit, at least… Unless we’re allowed to pull from our investments? (Which I’d never do! I’d go in debt before doing that!)
- Financial emergencies don’t invoke panic. For the most part, yeah… It always stings though.
- You’re okay with spending money on special occasions. No doubt! Can’t be obsessive!
- The thought of being generous sounds exciting and not panic-inducing. YES!! I get more pain from *not* giving back as much as I want to vs actually giving it… :(
- You’re happy about your financial situation. I am.
- Saving money has become a habit. Yup! Between retirement accounts and apps that help automate everything (Digit, Acorns) it’s been ingrained for years now.
- Others’ opinions about what you have/don’t have don’t concern you. Ain’t nobody got time for that!
- Paying the bills doesn’t require an in-depth plan. Haha, true… I love paying bills actually!
- Retirement and/or kids’ college expenses are covered. Retirement, yes. College for kids? We could be better about it… Kinda put it on pause the last few years while the Mrs. was working on finishing up her PHD, so once she’s back into the workforce again we’ll be revisiting it.
- Your debt-to-income ratio is below 30%. Yup! In fact, it’s 0% now w/ the mortgages gone.
- You’re thoughtful about purchases. I try to be, yes.
- Avoiding/eliminating debt is a priority for you. It was in the top 3 over the years, but never really the #1 spot since we weren’t dealing with credit card debt or other worse-than-mortgage types… I typically prefer to invest over paying off low interest debt, but I go in kicks depending on what’s motivating me at the time. As for *avoiding* it altogether, well, that’s always preferable, yes, but I’m not opposed to taking on debt where it makes sense. Like for business or college or even loans to cover crap cash flows for short amounts of time, etc. You never really plan to take on debt if you don’t have to, but you know – $hit happens.
- You budget or you’re so good at spending wisely that you don’t need to budget. Used to be the former, now it’s moved over to the latter :) We more or less spend roughly the same every month minus some random events that go down, but I give us enough padding where we don’t have to worry about it much… But I’m still a HUGE proponent of budgeting especially in those earlier stages!! One of the best things you can do! (Which of course is why it’s in the title of our blog here ;) Though lately it’s more about *financial freedom* being sexy than anything!)
- You have a plan for the unexpected. No comment, haha… Planning is not my strong suit, though depending on the situation I’m fairly confident we could overcome it. I just don’t have every last contingency planned or a million buckets of cash spread around for each possible scenario. Hopefully our cash + credit lines + investments could cover whatever might be looming!
- You buy appreciating as opposed to depreciating assets. Yup, pretty much… I don’t really buy any “things” anymore but just little “experiences” like eating out or some beers and coffee here and there and those such things… All extra money pretty much goes into investments these days (or into my kids ;)).
- Large purchases don’t create a damaging ding in your finances. I don’t know what these large purchases would be, but yeah – we’d be safe from a lot of them. Or we’d just finance them if it made better sense and didn’t screw over our cash flow (see – I’m okay with debt! But that purchase better be something damn good like a unicorn or trip around the world or something!)
How’d you do? I gave myself a 17 out of 20 as there were some halfies up there as well as one or two that I just suck at… Here’s the grading system Laurie came up with for it:
- 16 – 20: You’re kicking it!
- 11 – 15: You’re doing very well!
- 6 – 10: You’re off to a good start!
- 0 – 5: You’ve got room to grow.
She’s an overly positive person :) I’d say if you scored anywhere from 0-10 there are some big issues looming and it’s great you’re reading $$ blogs! We all have something we can work on, that’s for sure… The important part is that we’re moving towards the right direction!
Now to the 20 Signs You Need a Financial Makeover…
It’ll be interesting to see how similar in concepts these are as I haven’t looked at this for almost 6 years… If anyone’s still around from back then and left a comment, you should see how you’re doing now in comparison! If you’re not any better I need to rethink this blog :)
Here we go…
- You charge group dinners on your card and keep your friends’ cash to spend. I do, actually! Not a lot, but it saves me a trip to the ATM since I pull out $100’ish every month for “spending money.” Obviously the trouble area here is if you end up spending more than you intended to with all that new extra cash in your pockets.
- You spend more than 40% of your total income on rent. Nope… haven’t calculated it in a while, but I’d guess it’s around 20-25%?
- You’re constantly transferring your balance to get 0% interest on your credit card debt. Haha… Some people can pull this off pretty well (and to them I say, way to go!), but a lot of people get tripped up by the small print and lack of paying attention… It’s one thing to move over the debt from one place to another as long as the balance keeps going down, but if you’re continually adding to it there’s a bigger problem that needs addressing.
- You pay off one credit card with another. Isn’t that the same as above?
- Less than 10% of your income goes to your retirement savings. (Or worse, zero percent!) Yeah, that’s not good :( Of course, *anything* above 0% is better than nothing, but the goal is def. 10% and up depending on the stage you’re in… You gotta be investing in yourself or you’ll never break free!
- You have a credit card that doesn’t give you anything in return, like cash back or airline miles. Is that even possible these days? I guess it could be, but hopefully anyone reading this right now knows there are a TON of options out there for rewards if you want them. I don’t believe in messing up a system that’s working for you to get them, but almost every single card out there does offer some type of goodies these days fwiw.
- You don’t know what IRA means outside of Ireland. Hah! That’s all we invest in lately so I hope I know what it is :) And I hope you do too, even if you’re not able to contribute yet! You will one day!
- You pay the minimum balance on your credit card each month. Not preferable of course, but better than not paying them *at all!*
- You don’t open your credit card statement because you can’t bear to see how high the balance is. I feel for anyone currently in this spot :( If it’s you, PLEASE please please start facing the music and get a plan in order!! I know it’s scary but it’s only going to get worse until you face it! You can do it!! Get a glass (or 10) of wine ready if you need to! :)
- You don’t keep receipts because they remind you of what you’ve spent. Haha… I keep all receipts regardless, but I can see why people wouldn’t ;)
- You know your company has a 401k plan, but you have no idea what that is. Oh man, this is one of the EASIEST and SMARTEST things you can ever do. Companies are giving away free money left and right, and all you have to do is invest a little to receive it! Something you should be doing anyways! So please PLEASE hit them up if you haven’t started investing already and contribute *at least* up to the % they will match. There’s no better return out there, and you’ll hardly miss the $$$ from your paycheck – I guarantee it.
- You withdraw cash frequently from ATM’s that aren’t affiliated with your bank. That’s actually ALL I do since USAA doesn’t have a “real” bank, haha… Most places are starting to do the same too, at least with online banks, so if yours doesn’t it might be worth looking into.
- The number of credit cards in your wallet is higher than the number of dates you’ve had this year. Hahahaha… Fortunately no, but not by much :) We do need to get better at taking some alone time away from the kids though, which hopefully will be easier now that they’re getting older (already 2 and 4 – can you believe it??)
- You buy so much on eBay that they’ve awarded you VIP status. Hah. Back when eBay first came out yeah – I was an idiot – but now the only transactions that would be going on is them paying ME! They’re a hustler’s dream! ;)
- You want to start a savings account, but then sale season starts again! Psshh…
- You don’t have an emergency fund to pay bills should you lose your job. Def. have one, though not as plump as it once was/should be… Our biggest problem area right now.
- Your monthly extra cell phone minute charges are bigger than your monthly electric bill. Now THAT would be harsh. Not a problem anymore with Republic Wireless‘ unlimited plans we have, and really with the way the industry’s been going I’m not sure anyone will have this problem anymore? Everything’s “data” related these days as so much has changed since this quiz came out 6 years ago!
- You overdraw on your checking account more than once a year. Nope, not anymore… But I do have our savings linked to it just in case I do ever slip up.
- You live paycheck to paycheck. Not in the general sense, but there are periods we break even – or even lose some – with self-employment being what it is. Overall though I think we’re doing okay despite managing a family of four with one not-as-stable income over the past handful of years… I won’t be sad once the Mrs gets her career going again though, that’s for sure!
- You spend more on new shoes annually than you save. Yeah right! I think the shoes I’m wearing right now are at least three years old, and they’re the *newer* of the bunch :)
Okay, so these questions were wayyy different than the first set, haha… But actually a lot more fun to answer! Looks like 6 years ago I answered “yes” to 3 of these, but this time around only failed at 2 of them – woo! A 33% increase in status!
How’d you do? Do these make you feel better or worse than when you first got here?
Hopefully better! But if not, remember that it’s only a phase and you’ll get better with time! Not everything happens over night, especially with money, but what counts is that you’re *doing something* about it right now and not avoiding everything. After all, there are plenty of other sites you could be on right now but you’re here with us :)
So first, good job being here! And second, keep going strong as it’s well worth the fight… Lord knows I have some areas to be working on as well.
See ya in the comments…
******
PS: Funny thing about that last set of questions there – it was made up by a company who went out of business a short while after posting them ;) (Anyone remember, BillShrink.com?) I guess they had some financial problems of their own!
Other money tests you might like:
- Get these questions right and win The Game of Money
- Are you more like Warren Buffett, MC Hammer, or Macaulay Culkin?
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These are 2 excellent tests. I got 18 in the first one (as me now – the good with money me who’s learned all the hard lessons), then I did the second and laughed the whole way through it because I was exactly that person about 8 years ago – I was in dire straits and needed a financial makeover back then. I used to love ‘paying’ for the meal and drinks with my card and collecting the cash from my friends. Problem is, I’d always spend it before I got a chance to deposit it on to my card.
Also number 12, I was even worse than that – I actually used to withdraw cash at ATM’s from my credit card. Not even in an emergency. Just because I needed cash and didn’t have any in my cheque account. Utter madness!!!!!!
ACK!! That’s financial suicide right there! haha…. Way to jump over to the other side :)
“You’ve got a fully stocked emergency fund.” I can’t say yes because we raided this one location of money (instead of others, we have plenty of others) for a bachelor/bachelor party weekend for my brother-in-law. Now I’m waiting on the one guy to pay back the $265 for the weekend. And he was actually the best man!
Either way, the fact that you can talk to each of these points comfortably shows you something. Just a little fore-thought makes a HUGE difference. A couple “what-if’s” or “what big expenses are coming up in throughout the rest of the year” can make everyone feel more relaxed.
Haha… you remind me of a bachelor party I attended once where for some reason all our credit cards were rejecting the final bill of a club we were at, and we actually had to get the GROOM to pay for it since his was the only one that worked! EEK! Of course we paid him back and all that good stuff, but man… felt bad on that one!
We’re in the 16-20 range. “You’ve got a fully stocked emergency fund.” – we did. we depleted it last year when I was out of work. We are working on building it back up.
I have my financial house in order but I still spend more than 40% of my income on rent. I live in Canada, it’s expensive.
“You’ve got a fully stocked emergency fund.”
Any thoughts about considering your Roth IRA as an emergency fund? I’ve read several comments in reference to this during my loosely structured resesarch getting into financial independence over the last several months. As long as your Roth IRA is at least five years old, you can withdraw the contributions without penalty, right? The only drawback is that you can not replace these withdrawals, so your Roth will lose a significant portion of its wealth-building power if you had a large withdrawal. Lots more on this issue, but if you think of your Roth IRA as an emergency fund of last resort, you can change your “fail” to a “pass,” J$!
Yes, very true indeed :) We can def. tap it in a worse case scenario, but it would REALLY have to be a bad one as that’s a last last resort for me… I don’t like messing with future retirement stuff, even if there are loopholes in it, as I’d be too tempted to then raid it for other reasons as well… So it’s great we have it as a back up for sure, but in my mind it’s 100% off limits :)
Do NOT do this! Even $1000 in an IRA can grow to tens of thousands given enough time. You should really have a separate (and much more liquid) account as an emergency fund.
Awesome lists! I think being comfortable with special occasion spending has been one of the last ones for me to conquer. I still have a couple to work on but overall the 1st list left me feeling encouraged. I’ve always been willing to spend on special occasions but also felt conflicted about it. Questioning what I thought the purpose of money is helped.
I have an fully stocked emergency fund because I cash advanced a credit card over a 12 month 0% APR.
=)~
I hope you have like 1,000 reminders set up so you don’t forget to pay it back before all the fees and insane % come! :) You’re braver than I…
All good my man. Haven’t gotten a late fee in my 13 years of credit card ownership.
In reality, you DON’T have a fully stocked emergency fund because you’re going to have to pay that money back before the insane APR kicks in.
Why’d Bill Shrink have to throw 13 in there, I was going to ace that test…:)
Great quiz! 16 on the first and only 2 on the second set. My emergency fund is not quite stocked, but getting closer!
do dates with your wife count for 13?
Hah! I hope so!
Seems like I’m doing okay :) Success!
Hey J. Money, are you former military or are you military family?
Yup! What gave it away? :)
USAA….
lol but I asked you an either/or question. You answered yes. ;-)
oops, haha… son of a Marine :) they’d never let me in looking like this!
The only one I’m missing is kids college funds. Through their school district they can go to community college for the first two years for free. Anything beyond that we would have to pay for. By the time they get up there in age we should be able to cashflow the second two years. We have a plan, but no earmarked savings. Retirement and paying off the house are bigger priorities now.
Oh wow – free college, you don’t hear that too often! (Except anything relating to Bernie Sanders :))
This is a great quiz but I felt like I had PTSD going through the second one! SO many of these were me only a few short years ago! Yikes! Never want to get back in the boat where I couldn’t bear to look at my credit card statement.
Sounds like a great place you’re now in :)
I’m definitely behind on my 401k investment, though I do contribute enough to receive the max employer’s match. My emergency fund is fully stocked, which gives me so much peace of mind!
I don’t know what a glass of win is, but I want one (or ten)
Okay okay smarty pants, re-look at that part ;)
10. You don’t keep receipts because they remind you of what you’ve spent
Ha, we do this for everything except our “fun money” accounts. Our local barista always asks if we want our receipt, to which I say, “We don’t need to be reminded how much we spend here!” We LOVE going out for coffee (probably on this mornings agenda!) I’m working on a post on why I think it’s a hell of a good value. =) Coffee lovers unite!
Here here. Coffee outings are a great value when wanting to get work done or meeting catching up with someone…especially when free refills are part of the deal ;).
Agreed! Just hung out out our local cafe for a solid 3 hour yesterday drinking and writing…. the whole “don’t ever buy coffee” line is one of my top 10 I hate. In fact, I’m literally about to write up my top 10 or so pieces of advice I don’t like, and that will of course be on it :)
Apparently, I have 20/20 financial vision, but with an astigmatism…I failed #1 in the need money makeover questions. I also use friends as ATMs because all my banking is online only and they’re an easy source of cash ;).
I had to google “astigmatism,” haha… good SAT word!
Too funny! You have your “personal development objective” done for the day. Thumbs up! ;)
I’m about $1000 away from a fully funded emergency fund. Everything else is on schedule and progressing nicely even without stellar returns in the markets. All in all I’m Kicking it! Awesome! I am glad to report none of the makeover questions apply.
Congrats!! You’re pretty much beating all of us here :)
Great tests to see where you’re at financially. I see a few people say that they don’t have a fully stocked emergency fund but at the risk of sounding like an attorney…how do they define a fully stocked emergency fund? I’ve never really agreed with the “6 months of living expenses” in a savings account. Sure, maybe when I was not as financially stable….but I think of all my assets as an “emergency fund.” I think this is the Mr. Money Mustache approach. Anyways, I think the whole E-fund debate is a whole ‘nother post. And as for the amount of credit cards versus date…I’m with you on that. It’s tough when you have little ones and my wife and I also have to do better with getting some alone time. It’s also tougher when you’re into travel hacking…you know how many cards these guys rack up?!
Yeah – no universal answer for a “fully stocked emergency fund” for sure… We’ve considered ours full at $5,000 over the years, and then other time $50,000. We pretty much go with what makes us feel *comfortable* vs a specific #. And currently we’re not as comfortable as we’d like :)
Two thumbs up! I’d only quibble over whether I consider our emergency fund fully stocked because I have some bizarro habits of keeping most of my emergency money in cash and I’m now breaking that by investing more and more of it. I’ll still have more than 12 months of expenses in liquid accounts even after closing costs and looking down the barrel of $3000 in auto repairs this week. ::grimace face::
I thought for sure we’d fail on the housing (HELLO SF housing prices!) but we’re still “only” paying 29% of our net income, and that includes the mortgage, extra payments on the mortgage, HOA fees, and property tax costs. So we’re doing fine on that front too.
Nothing like passing internet quizzes to feel good about yourself :D
Hah – indeed! Pretty incredible about all that cash y’all have been able to save up!
Great test, I think I did pretty well on the test. Perhaps this warrants a blog post on my site. I love getting inspired by other awesome bloggers. :D
DO IT!!!
I scored myself 18 on the first test. Would say 20 with an explanation on the emergency fund and retirement. Wife and I have a good emergency fund, but in her opinion its not set. So to keep her happy we are adding to it diligently. The retirement is somewhere above 10% monthly contributions, but could be better. We are just taking it one monthly budget at a time. Two years after reading several books by Dave Ramsey, I am happy to say I see a glimmer of light at the end of the tunnel, and no longer fear its a train!
It’s a beautiful thing, isn’t it?
#15 You’re thoughtful about purchases.
Can I answer yes if as I’m buying something I’m thinking Damn it this is expensive??? ;) j/k
Love this! Let’s me know how much I’ve grown. Gotta continue building the retirement fund. Unfortunately you cannot draw your pension until 55 in the UK. So have to consider alternatives to fund that early retirement. Where there’s a will there’s a way!
Not looking so hot… gimme about a year or two and I’ll revisit this..
-KB
I’ll hold you to that :)
Dare I say, pleasantly surprised? Zero the naughty list… Maybe it’s not as bad as I thought! Except retirement savings – that will be my major area of improvement.
Between 18-20 for us. Being newly engaged, there are a lot of things that we need to put on the ‘Sit Down and Talk’ List, but our money habits have been better than before. Well, he’s learning to shift to budgeting and having goals and lots of mulah in the emergency fund. My biggest case are my students loans, but what’s new. Thanks for posting these!
“16. Avoiding/eliminating debt is a priority for you”
Like your attitude towards this as I agree, not all debt is bad debt. If it furthers your prospects, isn’t a drain on your wealth and you have a plan to pay it back as cheaply and quickly as possible, it can be a good thing! I use my credit card every month and pay the balance on payday. It helps me to budget, but most importantly it’s creating a positive credit history ready for that all important first mortgage application!
These are good lists. Thanks for sharing them. I think that there are periods when your fields are supposed to be fallow, and spending on investing in yourself should hopefully increase your yields for the rest of your years.
Thanks for sharing. I can pretty much check off the most of the positive side. What I find interesting is that there are a ton of people who consider saving putting aside money for things they plan on buying instead of saving for retirement/emergencies. You aren’t really saving up to buy a new coat, fridge or “insert random thing here”. I consider that more saving up for “X” vs saving in the true sense of the word.
Hah, true that.
Though I guess even saving for retirement is saving for something, eh? Though a much sexier something? :)
“You’ve got a fully stocked emergency fund” – Yes! I have an emergency fund equivalent to six months worth of salary. I recently had a health issue and despite having medical insurance at work, my emergency fund gave me that extra confidence and peace of mind. I knew that whatever the test result or doctor’s diagnosis may be, I’ll be fine financially.
https://twentysomethinglawyer.wordpress.com/2016/05/24/my-first-million/
I hope you’re feeling all good now! :)
What? I am not financially stable, J Money, on the basis of your points above. Thanks for making me realize that I am so. Haha! Time to turn to the way to being financially stable.
Better that you’re checking out $$ blogs than other types of blogs then :)
While I see your point, it seems like you are making the assumption that is all the only money coming in and out. That’s not the truth because the emergency fund goal is met and the extra money exceeds that as well as the balance and 0% loan.
Oh man.
I’m sad to say that the number of credit cards in my wallet is greater than the number of dates I have been on this year…
Always room to grow!
Haha! I scored 18 on the ‘financially secure’ test and happy with this one. Undortunately, I couldn’t score the first two points – I’m still not very happy with my financial situation (though situation itself is very good) and sometimes we argue about money (which, of course, is never my fault).
Never :)
And from the little I know about your finances, they are hot $hit my friend! You gotta be proud about that!
Awesome reality check buddy! I recently read the Rockstar Finance article on having a $0 emergency fund. Having it in investments compounding instead. What do you think about that? I’ve always tended to lean to the emergency saving side, but that article made some very good points.
Thanks and great article!
I liked that article a lot ‘cuz it made you think and gave other options (here it is for anyone who doesn’t know what we’re talking about: https://earlyretirementnow.com/2016/05/05/emergency-fund/), but personally it wouldn’t make me feel comfortable though logically it makes sense (and earns you more money over time).
That being said, I think there’s something to finding the right balance where you have enough stashed that’s cold hard cash and the rest invested elsewhere so you’re not totally missing out, but you can also sleep better at night. And if you’re in a relationship and/or have kids, that also plays a pretty important factor as well :) I’m way more riskier than my wife, so she helps me be more conservative while I help her calm her nerves a bit.. Or at least I try to do that!
So no – I’m not comfortable having $0 in liquid savings, but at the same time I don’t need $100,000 either. And it fluctuates over time depending on phases as well.