The financial world can feel complex, whether you’re navigating the basics of paying bills or setting up life insurance. Start by acknowledging that financial education is often a lifelong learning process, and it’s okay to start wherever you are. Take this quiz to gauge which areas you may need to brush up on when it comes to matters of money.
You scored out of .
5 or more correct: Financial Wiz You have a pretty good handle on what it takes to manage your personal finances. Stay plugged into all those purchases, savings and investments, and you’ll be set up to rock your financial goals (though considering your score, we probably don’t need to tell you that). Keep up the good work!
4 or fewer correct: Money Rookie We all have to start somewhere, and if you don’t know everything there is to know about personal finances yet, that’s ok! You’re on the path to learning more as we speak. Choose one personal weak spot, such as getting life insurance or starting an emergency savings account, and tackle it this month. It will give you momentum as you create a financially healthier future.
Know your DTI: Your debt-to-income (DTI) ratio is made up of all your monthly debt payments – credit cards, home and auto loans, etc. – divided by your gross monthly income. It's best to keep below 36 percent DTI. Know what yours is? If not, it’s time to find out, especially if you’re in the market for a loan, as a high DTI makes you less attractive to lenders. Learn more.
Start saving for retirement as soon as you can: At least 15 percent is a solid goal no matter how old you are. If you can afford more, great. But even if that number is less for you, less is better than nothing. Get that contribution channel open, and it’ll be easier to bump up your savings when you’re able. Learn more.
Monthly budgets are a must: You can’t spend less than you earn unless you know what both of those numbers are. If you haven’t already, assess your monthly expenses to create a budget you can stick to. Consider an app, such as YNAB or Mint, to help. Learn more.
Know your credit score: A credit score of 700 or above is generally considered to be “very good.” Scores range from 300 to 850, and the higher your score is, the better. Credit scores take a number of factors into account, such as total debit and payment history, to estimate your financial reliability. Check yours yearly to address changes or fraud that could negatively affect your lending options. (You are entitled to a free credit check from each of the three major credit organizations every year.) Learn more.
Keep an emergency savings fund: If you don’t have at least 3 months’ cost of living saved up yet, don’t be intimidated. First, remember that it’s not your total current expenses, but rather essential expenses for things you can’t live without. Second, know it doesn’t have to appear all at once. Set up monthly auto-pays with whatever you can afford now. Start saving what you can, and it will build over time. Learn more.
Don’t forget life insurance: Generally speaking, the younger you are when you buy it, the cheaper it is for all the years to come. If you’re in the market, talk to an independent insurance agent about your best options. Life insurance policies are often less expensive than you think. Learn more.
Whether you’re a financial wiz or a money rookie, we’re here to help you navigate your finances. Make an appointment with a personal banker today.