Financial health quiz

Gulf News, with Steve Gregory, managing partner at Holborn Assets, drew up a questionnaire to help you assess your financial health. Take a few minutes to answer the following:

Credit management

Do you always pay back the monthly minimum on your credit card balances?
a) Yes
b) Sometimes
c) I always repay in full each month

Correct answer: C. Always repay your credit card balances in full each month to avoid paying any interest charges.

Are you always late in making payments on debt?
a) Yes
b) Sometimes
c) Never

Correct answer: C. Make it a point to make payments on time, otherwise your bank will charge you a late payment fee.

Do you know how much the interest rate is monthly on each card you own?
a) Yes and I pay off the most expensive one fastest
b) No idea
c) Why, does it matter?

Correct answer: A. It does matter, as a cheaper card may be available in the marketplace.

Does your total borrowing of unsecured borrowing exceed?
a) 3 months salary
b) 6 months salary
c) 12 months salary

Correct answer: B. Six months is the maximum you should borrow at any one time, except perhaps for buying a house which will then be secured lending.

Do you shop for things you don’t need but can buy on credit?
a) Never
b) Sometimes
c) All the time

Correct answer: B. It’s okay to reward yourself occasionally with an item you love but don’t actually need. It’s not good to do it all the time.

Have you ever lied about debt?
a) Never
b) Sometimes
c) All the time

Correct answer: It should be A.  If it’s B or C, you are being dishonest to creditors or family, and perhaps your partner

Do you find yourself short of money?
a) Never
b) Occasionally
c) Every month

Correct answer: The ideal answer is A. If you answered C, then money controls you, and that is painful. Controlling your money leaves no surprises.

Do your bankers phone you to chase up payments?
a) Never
b) A couple of times a year
c) Every month

Correct answer: A.  It is daunting to have bankers chasing you continually for repayments of cards or loans. It’s great when that finally stops happening because you get on top of your debt issues

Protecting your family, health and lifestyle 

Do you check each year on the level of your life cover to ensure its adequate?
a) Yes
b) No

Correct answer: A Your family counts on you to do so.

Do you adjust your income protection insurance to ensure it matches your income?
a) Yes
b) No

Correct answer:  A.  This ensures you have income when illness or disability strikes. This is peace of mind for yourself.

Do you have critical illness cover to repay debts including mortgages?
a) Yes
b) No

Correct answer: A. Covering debt needs to be possible in the event of a serious illness. In fact, it should be repaid in full at such a time.

Do you have adequate medical insurance to meet your needs?
a) Yes
b) No

Correct answer: A. If you have health insurance, dealing with medical emergencies would be easier, financially.

Are you sure the right payment will go to the right person if you come to claim?
a) Yes
b) No

Correct answer: A. You really do need to be sure you have the correct beneficiary (ies) in place.

Planning ahead/building wealth

Do you run a monthly budget based on your income and expenditure?
a) All the time
b) When I have to
c) Never

Correct answer:  A. Creating a monthly budget helps you prioritize your expenses and find out which areas you need to cut back on.

Do you have an emergency fund with sufficient funds to keep you going for at least three months?
a) Yes
b) Sometimes
c) No

Correct answer:  A. Your emergency fund will come handy when you lose your job or the unexpected happens.

Do you pay a percentage equal to half your present age into a retirement plan each month?
a) Yes
b) Sometimes
c) Never

Correct answer: A. This ensures you will have enough money to sustain your lifestyle by the time you stop working.

Do you invest for school fee planning for your children’s further education?
a) Yes
b) Not yet, but I intend to
c) I don’t think it’s necessary

Correct answer:  A.

Do you own property?
a) Yes
b) I’m currently looking for options
c) I’m not into real estate

Correct answer: A would be ideal, especially if its consistently increasing in value.

Do you invest for capital creation for the future, perhaps to start a business or buy a property?
a) Yes
b) I’m working on it
c) No

Correct answer: A. This will provide rainy day money and possibilities for the future.