How are you feeling about your financial health? Are you anxious and insecure, secure and happy, or somewhere in between?
The symptoms of financial stress can be many. The American Institute of Certified Public Accountants says they include:
A growing waistline, as junk food becomes a coping strategy.
Diminished friendships, as people become more irritable and find less time for friendships.
Interrupted sleep, as worries invade the nighttime hours.
Annual checkups are recommended to keep us in good health and to detect problems early. I recommend an annual financial checkup for the same reasons. An assessment of your finances can help you avoid potential problems and remedy existing ailments while they are small enough to manage easily.
This is the first in a two-part series. Today, we’ll start with a personal-finance checkup. Next time, we’ll look at prescriptions for a secure financial future.
Answer “yes” or “no” to these questions:
1. Do you have a written budget that you revise regularly and follow each month?
2. Does your budget include accumulating money for purchases made on a less-than-monthly basis, such as insurance or tires?
3. Do you have medical insurance?
4. Do you have short-term disability insurance?
5. Do you have long-term disability insurance?
6. Do you have life insurance?
7. Do you have an emergency fund equal to at least three months of living expenses?
8. Are you spending less than 35 percent of your take-home pay on housing (rent, mortgage, property taxes, homeowners’ association fees)?
9. Do you make purchases with only cash or debit cards?
10. Are you investing 15 percent of your take-home pay for the purpose of achieving financial independence?
11. Are you saving for your children’s college fund at a rate that will allow them to attend a four-year institution without using student loans?
12. Are you paying on your mortgage at a rate that will allow you to pay it off in 15 years?
13. Do you work at your job because it’s your passion?
14. Has it been more than three months since you worried about money?
15. Do you have a dream toward which you are moving deliberately? If you have a partner, is it a shared dream?
Give yourself one point for each “yes” and see how you rank.
0-4 points: Financial stress level is very high. It’s time to take control of spending and money management.
5-9 points: Financial stress level is moderate to high. With a series of changes, financial security can be yours.
10-12 points: Financial stress level is moderate to low. Just a few changes will give you financial security.
13-15 points: Financial stress is low. Congratulations, you have true financial security.
Many factors can contribute to a lower score than you would like. This assessment is a starting point for understanding your behavior and choices. By consciously considering your financial situation, you can make the right changes.
Next month, we’ll look at the prescription for less stress and more happiness.
Durango resident and personal finance coach Matt Kelly owns Momentum: Personal Finance. www.personalfinancecoaching.com.