Please open your wallet/purse - and hopefully say "aaah. . . yes!" to each of the following annual financial checkup tests. I am prepared to "grow" my knowledge of and improve my attitude toward money management. I realize most of my financial habits come from parents and upbringing.
- I spend less than I earn - and use the extra money to reduce debt and/or invest. Many phone/computer applications can help me keep track of expenses.
- I take advantage of compound interest by investing from as early an age as possible.
- I avoid "bad" debt - typically a loan to buy something that wears out or breaks before the loan is repaid. I consider "good" debt - money to buy a long-lasting and ideally an appreciating asset, but I am aware of the risks of an investment losing value while I still have the outstanding loan.
- I invest in what I understand; I have an up-to-date financial plan.
- I know about the various laws and strategies that can help me keep my income tax as low as legally possible.
- I have insurance (life, disability, home/possessions) to protect myself/my family from losses I/we couldn't afford. I have a current will, power of attorney and "list of assets, liabilities and advisors plus steps to take after my death." n I appreciate and take advantage of the benefits and support available at work, in the community, from family and friends.
- I have - or know where to find - impartial and knowledgeable financial advisors.
How many of the preceding checkup items did you check off? Congratulations if you got a perfect or near-perfect score.
Make sure you circle any items that require follow-up action. Perhaps clip this article for a review in six months.
One study showed that 23 per cent of the population are financially fit, 51 per cent are borderline financially fit and 26 per cent are financially unfit.
Perfection is elusive, but it's worth taking even a small step toward making the most of your money.
Mike Grenby is a columnist and independent personal financial advisor; he'll answer questions in this column as space allows but cannot reply personally. Send an email to [email protected].
