Would buying a nice gift for a wedding or birthday strain your finances for the month? How about an unexpected expense, like a car repair — could you handle it easily, with some difficulty, or not at all?
Do you usually have money left at the end of the month?
In a fresh approach to helping consumers understand their money, the Consumer Financial Protection Bureau has developed a quiz to measure financial well-being. Answering 10 simple questions yields a score between 0 and 100. Scores below 50 indicate a high probability of financial struggle, the CFPB says, with scores above 60 indicating markedly less trouble covering basic needs or making ends meet.
» WHAT’S YOUR SCORE? Take the financial well-being quiz
You won’t need to look at your bank or retirement fund statements, or any numbers at all. The questions are about how secure you feel and how free you feel to make choices that let you enjoy life.
Financial experts say that’s exactly the right approach.
“How your finances make you feel is very important because that is ultimately the goal of assessing your finances and planning for them — to feel prepared, comfortable, stable and on track,” says Alexander Rupert, a certified financial planner at Laurel Tree Advisors in Cleveland.
How your finances make you feel is very important because that is ultimately the goal of assessing your finances.
Alexander Rupert, Certified financial planner
“This quiz goes straight to the heart of an individual’s day-to-day life. Imagine when someone wants to share in the joy of a wonderful occasion but doesn’t have the ability to make it happen — or is overjoyed to be able to purchase the most expensive thing on the wedding register. This is real life,” says Diane Manuel, a certified financial planner with Urban Wealth Management in El Segundo, California.
The CFPB introduced the quiz in a large national survey in late 2016. It reported that about a third of consumers scored between 51 and 60 on the financial well-being scale, with another third scoring higher and the rest lower. The average score was 54.
By age group, seniors over age 65 did the best, while young adults aged 18 to 34 scored the lowest. Men and women had similar averages. People in good physical health tended to score higher than those in poor health.
Once you’ve assessed how you’re doing, you might feel newly motivated about financial goals — much the way seeing your step count on a fitness tracker can inspire you toward exercise goals. One goal could be to increase your emergency savings, the biggest contributor to financial well-being, the CFPB found. Or set up a simple budget. If you have debt, planning to pay it off could be the best thing to do for your freedom to enjoy life.
The article How Are You Doing Financially? Take This Quick Quiz originally appeared on NerdWallet.