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The popular financial guru has all the basics covered in this financial quiz.

Key Point

  • Need a boost for your emergency fund? And are you paying off your credit card balance every month?
  • Are you saving enough for retirement? If you passed away, would you be willing to save your loved one’s extra heartache?
  • Suze Orman’s financial fitness test covers everything from credit card habits to retirement planning.

Last month, Suze Orman included a financial strength test at the bottom of various posts on her site. Credit Covers everything from how she uses her cards to whether she’s prepared for old age and death. The popular author, presenter, and financial podcaster first posted her test in 2017, and that’s still true today.

How is it going? Are you a financial tycoon? Can you answer “yes” to all of the following questions?

1. Do you pay your credit card bills in full each month?

Credit cards can be powerful financial tools. Earn rewards for your spend, earn perks like insurance and fraud protection, and qualify for sign-up bonuses. However, the balance negates many of these advantages. Only charge what you can pay at the end of the month.

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If you can’t pay your credit card bill in full, you may end up paying interest on your purchases. Some cards have interest-free promotional periods, while others bring his APR above 16%. Holding a balance can improve credit utilization and lower your credit score.

2. Do you have an 8-month emergency savings fund?

An emergency fund is a buffer against unexpected events such as medical crises and job losses. With a well-stocked emergency fund (ideally in an accessible savings account separate from your daily checking and other accounts), you can weather any financial storm. . Orman has increased his emergency funding recommendations as the likelihood of a recession increases. She now suggests to her fans that she keep 12 months of her living expenses hidden.

3. Did you pay for the car you are driving with cash or a loan within 3 years?

The cost of buying a car is higher than ever. Unfortunately, one way consumers are coping with increased costs is by taking out longer loans and spreading the costs over a longer period of time. trouble? They pay more interest and run the risk that their car will be worth less than they owe.

Regarding buying a new car, Orman said: It’s been years since the car paid off. ” She also says you should never lease a car.

4. Do you take at least 10% of your gross salary for retirement?

According to Orman, the average American lags behind in retirement savings. She wants us all to set goals for retirement and start saving through a retirement plan, an IRA, or a regular taxable account. We propose that 100% be used for retirement funds. If you’re in her 30s, she thinks that number should be 15%, and when Orman gets older, she thinks she wants the savings rate to go up to 20%. I’m here.

5. Do you have a long-term asset allocation plan for your retirement investments?

An asset allocation is the mix of stocks, bonds, and cash you hold. Orman points out that you should decide what percentage to keep and check in regularly to make sure you’re on track. Orman is a fan of long-term investments, but he also points out that he can’t let everything go entirely on autopilot. If you’re aiming to be 70% in equities and 30% in bonds, a dramatic rally in the stock market can throw that balance out of whack. Also, as you get older, you may want to change that ratio to reduce short-term risk.

6. Do you have term life insurance to ensure the protection of your dependents?

Orman says you need life insurance if you have someone dependent on your income. It could be a child, spouse, sibling or parents. Life insurance means the people you care for and provide won’t struggle financially if you die.Orman also suggests term life insurance. This is valid for a period of time and is often more affordable.

7. Have you taken steps to manage your affairs in case you die or become incapacitated?

Orman says there are certain paperwork we all need to minimize bureaucracy and hassle for our loved ones should something happen.

  • will. A will determines what happens to your property after your death.
  • trust. A living revocable trust is a way that you can continue to control your assets while you are alive, but at the same time allow your heirs to avoid probate.
  • will to live. This document describes customer preferences for end of support. You can express your wishes for resuscitation, organ donation, specific treatments, etc. and save relatives who have to make these decisions on your behalf.
  • Power of attorney for medical and other matters. Power of attorney means authorizing someone to act on your behalf in certain circumstances. A financial power of attorney covers money matters, and a medical power of attorney covers your health.

Thinking about serious illness or death is disturbing at best. But Orman points out that having a real estate plan can save a lot of heartache for your loved ones.

8. Have you verified all beneficiaries of all investment accounts and insurance policies within the past year?

Unfortunately, making a will doesn’t guarantee that your designated beneficiaries will receive everything as intended. Let’s say your ex-spouse is listed as a beneficiary on her IRA or insurance policy. Certain policies take precedence over what is written in your will, so if you do not update each document, you may be entitled to receive money from Yuan. Make sure the has moved to the desired location.

how was it?

If you don’t answer yes to all the questions above, don’t panic. We can’t all be financial superheroes. The important thing is to plan and understand how you can progress in some of these areas. , after a few months you can increase it by another 1%. don’t go crazy. Passing exams is always fun, but the key here is finding sustainable ways to build a strong financial foundation.

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