20 Questions:— How Healthy Are Your Money Values?
by Dobby Gibson, Marc Hequet and Heidi Pearson

There’s only one way to determine whether you’re handling your finances successfully, and that is to learn whether the ways in which you spend, save and share represent healthy money values.

Whether you scrutinize your portfolio weekly or haven’t
balanced your checkbook in years, these 20 questions are the ones you need to ask yourself before you pay another bill—and certainly before you spend another dollar.

But first, relax! Many of the most important questions don’t
require counting a penny. Keep score and see how you do. While this quiz can’t replace advice from a Thrivent Financial representative, it can get you moving in the right direction.

1. When you get paid, what’s your first priority after tithing?
Invest or save at least 10 percent: 5 points
Invest or save 5 percent: 3 points
Pay the bills: 1 point
Start spending: 0 points

Studies show that those who save last, save the least. “Monthly savings should be a part of everyone’s fixed budget,” says Gregg Sainsbury, regional sales consultant with Thrivent Financial in Minneapolis. Put savings in your fixed budget just as you would your car payment or any other bill.

2. Is the money you give part of a larger charitable giving plan?
Yes: 5 points
No: 0 points

If you answered “no,” consider trying the 10-10-80 concept: give 10 percent of your income to church or charity, save 10 percent for the future and use the remaining 80 percent to live on today.

3. Do you have a budget—and do you stick to it?
Yes: 5 points
I have a budget but sometimes slip: 3 points
No: 0 points

Running your personal finances without a budget is like running a company without a business plan. The result is spend-as-you-go and too much debt. Log your receipts into a simple spreadsheet. How much do you spend on eating out? “Redirecting these dollars to college funding or retirement dreams can make a real difference in the goal-achievement time line,” says Melissa Knippa, a Thrivent Financial senior financial consultant in Austin, Texas.

4. Do you discuss money and budgeting openly with your family?
Often and willingly: 5 points
Only when I have to: 3 points
Never: 0 points

Experts say that healthy money values include sharing financial decisions with those most affected: your family. “Both parents should be keenly aware of the family budget so they can make informed, intelligent decisions with their money,” says Sainsbury. “Typically one parent takes care of all the finances, which is just fine as long as the other parent is aware of the family budget, so he or she knows how much is OK to spend on things like clothes and entertainment.” The same holds true for the kids. If they think money magically comes from ATMs, it’s time to talk.

5. Do you carry a credit-card balance from month to month?
No: 5 points
Sometimes, but I pay it off in six months or less: 3 points
Yes: 0 points

With interest rates often exceeding 10 percent, credit-card debt is about as bad an investment as you can make.

6. How do you treat ATMs?
As a source for scheduled, budgeted withdrawals: 5 points
As a quick fix whenever I’m low on spending money: 0 points

The only way to be a healthy spender is to budget your withdrawals.

7. How many months’ worth of liquid savings do you have available in the case of an emergency, such as a job loss?
Six months’ worth: 5 points
Three months’ worth: 3 points
About one month’s worth: 1 point
Isn’t that what my credit card is for?: 0 points

“Most people consider their credit cards as their source for emergency cash,” says Sainsbury. “The problem with that is: What happens after the emergency has been taken care of? Then you’re deep in debt.” Savings to cover at least three months’ expenses is a good guideline. Savings to cover six months’ expenses is even more security.

8. Take a quick look at your checkbook register, credit-card statement or online bank statement. Do these ledgers reflect the legacy of giving you aspire to?
Yes: 5 points
Eh, somewhat: 3 points
No way: 0 point

Do you see as much charitable giving as you would like? “When your executor reads your checkbook and tax return,” says Knippa, “will your values story be speaking? What legacy will your checkbook teach to your heirs?”

9. Do you own your own home?
Yes: 5 points
I’m productively saving for one: 3 points
No: 0 points

10. What percentage of your gross income goes toward your rent or mortgage payment?
25 percent or less: 5 points
26 percent to 29 percent: 3 points
30 percent or more: 0 points

Thrivent Financial professionals suggest a limit of 25 percent to 28 percent of gross income for housing. Payments beyond that put too large a strain on monthly cash flow.

11. Is your house or apartment the right size?
Yes: 5 points
There are a couple of empty bedrooms: 2 points
Too big; I could live in smaller space: 0 points

Over the long term, more-efficient housing can reduce costs and help you save more for retirement or pay off debt. A Thrivent Financial representative can help you weigh the pros and cons of changing your housing situation.

12. Do you have a retirement account, such as a 401(k), 403(b) or IRA?
Yes: 5 points
No: 0 point

Remember: IRAs are not only for a working spouse. “Make sure that your stay-at-home spouse has a fully funded retirement account,” says Knippa. “Start a spousal Roth IRA or traditional IRA, and you can reduce the length of time it will take you to reach your retirement goals.”

13. How much do you contribute to your retirement fund every month?
10 percent or more: 5 points
5 percent to 9 percent: 4 points
1 percent to 5 percent: 2 points
What retirement fund?: 0 points

As a general rule of thumb, if you start saving for retirement at age 20 and you plan to work to age 70, then setting aside 10 percent of each paycheck for retirement may be sufficient, says Timothy Flitter, a Thrivent Financial associate in Madelia, Minnesota. “But if you want to retire young and you’re just starting to save at 40,” he adds, “you may have to save 30 percent or more.”

14. Do you know how much money you need to save for retirement?
Yes: 5 points
No: 0 point

Saving without a goal means you’re either saving too much, putting an unnecessary strain on your cash flow. Or, far more likely, you’re saving too little, which will mean working longer and saving more at a time in your life when it’s more difficult.

15. How often do you reconsider how your assets are distributed in your investment portfolio?
Every year: 5 points
Every two or three years: 3 points
Never: 0 points

As you age, your investment strategy needs to change. Generally, during peak earning years, you can put more of your retirement savings into investments that are slightly riskier but have a better chance of high returns. As retirement nears, shift away from riskier vehicles to safer vehicles. In addition to the aging process, changing life circumstances (a new baby, an unexpected job loss, a medical emergency) also warrant more frequent portfolio review.

“The key is diversification,” says Jeff Frost, a Thrivent Financial regional management associate in Cheyenne, Wyoming. “Make sure that you are taking advantage of all different asset classes in your portfolio and consider automatic rebalancing. By having your hand on different pieces of the pie, you spread out your risk.”

16. Do you know how you will pay the expenses associated with long-term care if you need it?
Yes: 5 points
No: 0 points

Paying for long-term care,* including costs arising from home care, an assisted-living facility or nursing-home stay, can put a huge strain on your assets. Nursing homes can cost about as much per day as a hotel, says Flitter. If you need care during the latter portion of your life, you will probably pay by selling some of your assets—and that may mean owing taxes on the income from the asset sale. Premiums on long-term care insurance may be less expensive than taxes, but if you wait to obtain a plan, the premiums will cost more the older you are. “The best time to buy long-term care insurance is always now,” says Flitter. “It’s best not to wait.”

*Long-term care insurance is offered through Thrivent Financial for Lutherans’ wholly owned subsidiary brokerage company.

17. Do you know whether or not you have enough life insurance?
Yes: 5 points
No: 0 points

“When I die, I don’t want my family to be sad for a lifetime, but rather empowered, to be able to remain in our home and school, to be charitable instead of receiving charity,” Flitter says. “That’s why I own 15 times my income in life insurance.” If you quit working and your insurer paid out your life insurance to you today—how many years could you live on it? Three? Ten? Twenty? Is that enough for your surviving beneficiary?

18. Do you have enough disability insurance? Will Social Security pay your bills if you’re disabled?
Absolutely: 5 points
I think so: 3 points
I haven’t thought about it: 0 points

Your income is fundamental to your financial well-being. “Talk to anybody who has been flat on their back without the ability to go out and earn a living,” says Frost. “The basis of all planning is disability protection, which can help secure your hopes and dreams.” Adds Knippa: “Take the time to read and understand the definitions of disability in your existing disability income insurance contract. Does your plan cover a partial disability?”

19. How often do you meet with a financial professional?
Every year: 5 points
Once in a while: 3 points
Uh oh, I don’t even know who my financial professional is: 0 points

20. Do you buy or lease a new car every couple of years?
No: 5 points
Yep, I admit it—I’m addicted to that new-car smell: 0 point

If you buy a new car for $25,000, drive it 100,000 miles and sell it for $5,000, your net cost per mile is 20 cents, notes Flitter. The person who buys that used car for $5,000 and drives it for another 50,000 miles pays 10 cents per mile, plus any repairs. If you buy that new car and drive it 150,000 miles, your overall net cost is 17 cents per mile, plus repairs. Used cars—or new cars driven long term—are always a better bargain.

Scoreboard

80-100 points: Top of the class
Congratulations! You’re in good shape. Keep doing what you’ve been doing.
Remember to check in with your Thrivent Financial representative at least every year, or whenever your situation changes.

60-80 points: Honorable mention
Nice job. You’re doing pretty well. Take a look at the questions that earned a low score. These represent opportunities for greater financial preparedness.

40-60 points: You’re on your way
You’re doing some thinking and planning, but not enough. Getting on track is easy. Your Thrivent Financial representative can help you prioritize and address the areas that need more attention.

0-40 points: Time to hit the books
OK, so you’re no financial wiz, but now you have an idea of what actions you need to take. Your first step is easy. Simply call your Thrivent Financial professional to help you get started.

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