How is your financial health?
Money Magazine has a fun little online calculator to determine your financial health.
You start by entering your age and gross income and then answer a few short questions about each of the following categories:
- Housing payments
- Debt
- Emergency fund
- Investment diversification
- Investment in company stock
- Life insurance
- Retirement savings
Here’s some personal finance take home points from the exercise:
- Housing payments should not exceed 28% of your gross income
- Debt payments should not exceed 36% of your gross income
- You should keep at least 3 months worth of living expenses in an emergency fund.
- If you are saving for retirement and want to know a quick and dirty way of determining how much of your savings you should have in stocks use 120 minus your age. Put the rest into bonds.
- Keep your investment in your company’s stock below 10%.
- You need enough life insurance to replace 5-10 years of your salary if you have young children or significant debts. Or none at all if you lack these.
I got an ‘A’ on the exercise. I’m pretty happy about that.
