How Healthy Are Your Finances?

Millions of Americans make a commitment to get in physical shape each January, but what about taking care of their financial health? It seems far fewer make a commitment to being financially fit.

How many of us even know how healthy our finances are? If you’re interested in finding out, CNN Money has put together a great online quiz that will help you get started.

The quiz looks at several different areas of financial health. You simply answer a few questions to find out if your finances are in “danger” or if you’re on the right track. These areas include:

Housing payments
Are you spending too much on housing? As a rule of thumb, you should spend no more than 28 percent of your gross income on housing. (Of course, that’s not always possible in the high-cost Bay Area, but it’s still worth knowing.)

Debt
How much of your monthly earnings goes toward loan and credit card payments?  Your total debt payments should not exceed 36 percent of your gross income.

Emergency savings
If you were to suddenly lose your job, would you have enough money to survive? Experts recommend keeping at least three months’ worth of living expenses in a savings account or high-yield Money Market fund for emergencies. If you have kids, you should have enough money set aside for a minimum of six months.

Diversification

How much of your investment portfolio is in the stock market versus investments such as bonds and annuities? CNN Money gives an interesting tip: “If you’re saving for retirement and want a quick idea of what percentage of your portfolio should be in stocks, subtract your age from 120.”

Company stock

How much of your portfolio is invested in your employer’s stock? The recommendation is to invest less than 10 percent in employer stock.

Life insurance
Would your family be financially covered in the event of a tragedy? Your life insurance policy should be enough to replace at least five years of your salary (10 years, if your kids are young or you have significant debt).

Retirement savings
Your retirement savings depends on many things, including how much of your pre-retirement income you expect to draw, how much you have saved so far, how you want your savings to grow, and how long you expect to live. The bottom line, though, is that if you’re not saving for retirement, you should be. Now.

These are all areas you should be reviewing when you’re ready to kick your finances into shape this year. Take the CNN Money Financial Health Quiz today to find out where you stand on the financial fitness scale.

If you’d like to speak with an expert who can help you come up with a personalized strategy for your financial goals, schedule an appointment with a Tech CU Financial Advisor* by calling (408) 467-2390 or sending an email to invest@techcu.com.

To learn more about Tech CU Investment Services and Financial Advisors, click here. 

*Investments offered through CUSO Financial Services, L.P. (CFS) are not NCUA/NCUSIF insured, not Credit Union guaranteed, and may lose value. Financial Advisors are employees of Tech CU and registered through CFS. Technology Credit Union is in partnership with CFS (Member FINRA/SIPC).