When it comes to finances and cash-flow, are you swimming, treading water, or sinking? Choose the letter that best describes where you are today:
I use a credit card but always pay off the balance every month.
A. That’s exactly right.
B. Most of the time I do but there are months where I can’t.
C. It’s rare when I don’t have a credit card balance.
I usually pay just the minimum on my credit card balance every month.
A. No way. I always pay off the balance.
B. It really depends on my other expenses that month.
C. That sounds about right.
I contribute to my company’s retirement plan.
B. I’d like soon but I don’t think I can afford it.
C. There’s no way I have the extra money to invest.
I put as much money as I can in my company’s retirement plan.
A. I max out or am pretty close to maxing out the retirement plan.
B. I put some money in but not as much as I would like.
C. I couldn’t afford to pay my rent if I maxed out my retirement plan.
I seem to run out of money at the end of the month.
A. I sometimes have excess money that I can save that month.
B. I have just enough to cover my expenses every month.
C. That’s exactly right.
I contribute to an investment or savings account every month.
A. Of course.
B. Once in awhile I can save but then big expenses come up and wipe out my savings.
C. I don’t have enough to save or invest.
I make just enough money to pay the bills every month.
A. I have money left over after I pay all of my bills.
B. That’s exactly right.
C. On a good month I have enough, but I normally fall short.
Once I make more money or the kids move out I will be able to save for retirement.
A. Why wait? I’m saving now.
B. I either have to make more or spend less to be able to save for retirement.
C. I should probably first pay off my debt before I save for retirement.
I use a credit card to support my lifestyle.
A. No way.
B. Once in awhile I will use a credit card to buy something but usually my income supports my lifestyle.
C. I will often use my credit card because I don’t have the money to pay cash.
I work hard but don’t seem to have anything to show for it.
A. Not true. I have a growing savings and investment account to show for my hard work.
B. What I make I seem to spend.
C. The only thing I have to show for my hard work is loans and credit card bills.
Scoring the Quiz
Add up all of your A’s, B’s, and C’s.
If you scored highest in A’s
Congratulations! You’re getting ahead every month—you’re swimming to your goal. You are an active saver. All of your hard work is getting you ahead. Instead of waking every morning, driving to the office, and working 40 or 50 hours a week with nothing to show for it, you are investing in yourself. With every month you are better off financially than the month before. You don’t settle for “getting by” when you can get ahead. At the end of your journey, you will have made it to your destination. Don’t relax yet though. Even though you are above water, you might be able to optimize your income and savings even more. You can reach your destination quicker and more easily by learning the tools and implementing the Action Items in the upcoming lessons.
If you scored highest in B’s
The good news is that you’re not falling behind. The bad news is that you are not getting ahead. You are treading water. You may work hard and you may put in 60 hours a week, but you are spinning your wheels. At the end of the day, the week, month, or the year, you are in no better shape than you were at the beginning. In fact, you are in worse shape. Even though you are paying your bills and aren’t racking up credit card debt, you are getting closer to your goals and are no closer to reaching them. Every day you are not getting closer to your goal you are creating more pressure because you have one less day to reach them. How long can you tread water without getting tired?
The ideas and Action Items in the upcoming lessons will greatly benefit you. You’ll be able to improve your financial health so you can do more than just survive. You will see tangible results from making a few changes in your finances. Rather than be at the mercy of your income and expenses, you will be able to take control of you cash-flow.
If you scored highest in C’s
It probably doesn’t come as a surprise to learn that you are sinking. You are in worse financial shape at the end of every day. Your income isn’t supporting your expenses. You may be incurring more debt every month or you may not be able to get out from under the debt you’ve already incurred. In either case, the debt and expenses are dragging you down and keeping you under water. You won’t be able to reach your goals if you continue down this path. You need ideas and tools you can immediately use. If you are in debt, you’ll learn how to how to get out from under it and start getting ahead.
If you scored highest in B’s or C’s, continue following weekly lessons to learn how to take control of your cash flow!
The proceeding blog post is an excerpt from The Six-Day Financial Makeover: Transform Your Financial Life in Less Than a Week!, available now on Amazon.
About the Independent Financial Advisor
Robert Pagliarini, PhD, CFP®, EA has helped clients across the United States manage, grow, and preserve their wealth for the past 25 years. His goal is to provide comprehensive financial, investment, and tax advice in a way that was honest and ethical. In addition, he is a CFP® Board Ambassador, one of only 50 in the country, and a real fiduciary. In his spare time, he writes personal finance books, finance articles for Forbes and develops email and video financial courses to help educate others. With decades of experience as a financial advisor, the media often calls on him for his expertise. Contact Robert today to learn more about his financial planning services.