Family Fundamentals: Resources can help measure financial fitness (July 2012)
We have little debt, but we also
have trouble putting money into savings on a regular basis. I feel pretty
comfortable with our family finances, but how can I tell if we’re really doing
Determining fiscal fitness isn’t
always easy. But you don’t want to wait until you get hit with an unexpected
expense or sudden loss of income to find out how fragile your finances really
Recently, a study of 2,100 adults
by the National Bureau of Economic Research revealed that half of those
surveyed would likely not be able to come up with $2,000 if an unexpected need
arose in the next month. That means they’d be stuck if they encountered a major
medical expense or car or home repair. For those who make between $100,000 and
$150,000 a year, nearly one in four said they “certainly” or “probably” would
not be able to come up with the money.
Having an adequate emergency fund
is not the only measure of financial stability. America Saves, a national
campaign to encourage people to reduce debt and build savings, recently listed
“Five Signs You Are In Financial Trouble” (http://bit.ly/finantrouble), asking:
- Do you use your credit card for
basic needs like rent, insurance and food?
- Can you only afford to make
minimum payments on your credit cards?
- Do you worry about finding the
money to make monthly car payments?
- Do you borrow money to pay off
- Have you used a home equity
loan to refinance credit card debts, then run up new revolving balances on your
There are plenty of other red
flags that you may be financially unstable. Barbara O’Neill, a certified
financial planner and family finance specialist with Rutgers Cooperative
Extension, lists 34 warning signs in “Danger Signals of Excessive Debt,” at
http://bit.ly/debtsignals. You could be in trouble if you see yourself in five
or more of the indicators, such as being chronically late on household bills,
being dishonest with your spouse or partner on use of credit cards, or being
unsure how much debt you’ve accumulated (and afraid to add it up).
O’Neill and others at Rutgers have
also developed an online Financial Fitness Quiz that you can take to measure
your current financial practices. Just go to
http://njaes.rutgers.edu/money/ffquiz/ and answer 20 questions about financial
management, saving and investing, insurance and estate planning, use of credit,
and shopping and spending. The survey, which is part of a research study, also
asks for some basic demographic information. When you’re done, you receive a financial
fitness score and suggestions for improvement based on your responses.
For even more guidance, see the
Personal Finance page under the “Family” menu at http://www.extension.org. It
offers a wealth of information from Extension experts from land-grant
universities across the nation.
Family Fundamentals is a monthly column on family issues. It is a service of Ohio State University Extension and the Ohio Agricultural Research and Development Center. Send questions to Family Fundamentals, c/o Martha Filipic, 2021 Coffey Road, Columbus, OH 43210-1044, or firstname.lastname@example.org.
OSU Extension, Family and Consumer Sciences