Financial IQ Test: How Healthy Is Your Financial Plan? By Nora Dunn
What aspects of personal finance does your financial plan cover? Are you focusing on the right things and bouncing your ideas off somebody knowledgeable and trustworthy? Does your financial plan excite you? (Because it should.) Or do you have a plan at all?
Following is a Financial IQ Test to help you determine how healthy your financial plan is.
Simply look at each statement, and answer it with a YES, NO, or NOT SURE. Keep track of your answers, and we'll see how you score at the end.
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Financial IQ Test: How Healthy is your Financial Plan?
My financial plan addresses Estate Planning.
My financial plan addresses Tax Planning.
My financial plan addresses Insurance Planning.
My financial plan addresses Retirement Planning.
My financial plan addresses Budgeting and Cash Flow.
My financial plan addresses Asset Allocation.
My financial plan addresses both long-term and short-term savings – with specific investment goals noted.
My financial plan addresses Emergency Funds.
My financial plan is written down, and updated at least once every three years, or when a significant life change happens.
I re-evaluate my goals regularly and change my financial plan if my goals have significantly changed.
I have a contingency plan.
My financial plan focuses on more than just investment returns and portfolio composition.
My financial planner is somebody I feel comfortable with, and who I trust.
I’m not solely focused on goals for the future, and instead have short-term goals that are fulfilling and which keep me motivated and happy.
Major life events (and goals) like having a family are taken into account and financially planned for.
I understand that I don’t need to be a certain age to start financial planning.
My plan incorporates a balance between planning for tomorrow and living for today.
My financial plan is entirely tailored to me and my needs, and is not a template.
Numbers and Projections
My financial plan takes into account inflation, as well as present and future values of money.
My financial plan includes projections of the future values my automatic savings plans.
The rates of return used in my financial projections are modest average returns based on a long history of performance and asset allocation standards.
Did you keep track of how many times you answered YES, NO, and NOT SURE? Great! Give yourself the following points for each answer:
YES = 4 points
NO = 0 points
NOT SURE = 2 points
Score 0-28: If you have a plan at all, it’s not very good.
You’ve got to plan for your future (as well as today), because nobody else will do it for you. On a personal note, I “retired” at the age of 30 because I had a financial plan from the day I started working.
My intention was never to retire so young (and in reality I still have to work to keep my full-time travel lifestyle alive), but with my attention to financial fitness and diligent saving, I had the financial freedom to choose some pretty liberating options at a relatively young age.
Check out some of the Wise Bread resources below to get started on your own financial plan. Remember, you’re not committing to anything and nothing is set in stone with your financial plan; it should evolve with your life.
Score 29-56: Getting there…
Okay, so you’ve probably thought about financial planning, and you may even have a plan of sorts in place, but you’re probably missing out on a number of aspects of financial planning that could be very beneficial for you. Don’t be afraid to use the services of an expert, and ask lots of questions.
Knowledge is power, and being afraid of your finances does nobody any good and you a whole heap of harm. If you don’t know what you don’t know, then check out the resources below to get started.
Score 57-84: Keep on planning!
You likely have a fairly comprehensive financial plan, and you’re on the right track overall. Keep reviewing your plan, and use it as a motivational road map for life – not just a dull series of meaningless projections.
Remember to incorporate things into your financial plan that keep you motivated, and focus on your goals instead of dollar amounts. Knowing how your money will help you live your life and enable your dreams is much more rewarding than focusing on numbers without meaning.