May 04, 2017
A recent Gallup poll found that Americans are the most positive about their financial situation in a long time. Fifty-two percent reported that they feel good about their finances. That’s a big jump from the 41 percent who felt the same five years ago.
It’s easy to see why so many more of us are feeling better about our finances. A strong bull market in stocks and rising home prices indeed are good for our balance sheets and our confidence. But rising 401(k) and home values aren’t a guarantee that you are in good financial shape.
Are you ready to take my Financial Strength test to see if you are indeed in good shape?
Answer YES to every item below and you have my congratulations for not just feeling more positive, but having taken all the key steps to in fact be on the road to financial freedom.
Suze’s Financial Strength Test
Answer Yes or No to the following statements
• I pay all my credit card bills in full each month.
• I have an eight-month emergency savings fund separate from my checking or other bank accounts.
• The car I am driving was paid for with cash, or a loan that was no more than three years, and I sure didn’t lease!
• I am contributing at least 10% of my gross salary to a retirement plan at work, or I am saving at least that much in an IRA and/or regular taxable account.
• I have a long-term asset allocation plan for my retirement investments, and once a year I check to see if I need to do any rebalancing to stay on target with my allocation goals.
• I have term life insurance to provide protection to those who are dependent on my income.
• I have a will, a trust, an advance directive (living will), and have appointed someone to be my health care proxy.
• I have checked all the beneficiaries of every investment account and insurance policy within the past year.
So how did you do?
If you answered yes to every item, congratulations. If you are working on improving on a few items, I say congratulations as well. As long as you are committed to truly creating financial security, I applaud you. If that means you are paying down your credit card balances, or are building up your emergency fund with automated payments, that’s more than fine. You are on your way! But if you found yourself saying No to any of those questions, and you’re not working on moving to Yes, then I want you to stand in your truth. No matter how good you feel, you have some work to do before you can honestly know that you are on solid financial ground.