Assessing your money management skills
A lot of people avoid the whole concept of managing their finances, but it is one of the most important life skills. Good financial habits are based on overcoming our biases and taking a proactive, mindful effort into managing and maintaining our money.
The real secret to personal money management is understanding that if you don’t live within your means (i.e. spending less than your net monthly earnings and saving the difference), then you may wind up amassing a lot of high-interest debt very quickly.
To help develop good money management skills use the following behavioral finance checklist, which is a welcome assessment to regularly track your financial life for better outcomes.
How often you have engaged in the following activities in the past six months:
1 = never, 2 = seldom, 3 = sometimes, 4 = often, 5 = always
1. Comparison shopped when purchasing a product or service
2. Paid all your bills on time
3. Kept a written or electronic record of your monthly expenses
4. Stayed within your budget or spending plan
5. Paid off credit card balance in full each month
6. Maxed out the limit on one or more credit cards
7. Made only minimum payments on a loan
8. Began or maintained an emergency savings fund
9. Saved money from every salary
10. Saved for a long-term goal such as a car, education, home, etc.
11. Contributed money to a retirement account
12. Bought bonds, stocks, or mutual funds
Please rate your behavior regarding insurance within the past year on a scale of 1 – 5:
1 = Never, 2 = seldom, 3 = sometimes, 4 = often, 5 = always.
13. Maintained or purchased an adequate health insurance policy
14. Maintained or purchased adequate property insurance like car or homeowners insurance
15. Maintained or purchased adequate life insurance
You can improve your money management skills and live a financially responsible life. How did you rate?