Quick Personal Financial Self Assessment Checklist

This quick personal financial self assessment is a great benchmark. It’s not scientific, but it will show you where you are strong and where you need to improve.

Personal Financial Self Assessment

Quick personal financial self assessment will show areas needing attention
Quick personal financial self assessment will show areas needing attention

Sometimes people ask me to suggest a quick approach to assess their money-handling fundamentals. Normally, they continue: “We just don’t seem to be at peace with our personal finances. Indeed, after repaying a large credit card debt, and becoming debt free, we feel burdened.” Puzzled, I ask, “Do you mean you seem to follow a pattern of acquiring, repaying, re-acquiring debt…probably over an extended period? And though your income is more, your finances now are worse than they were, say, five years ago?” Instantly, they reply, “That’s it!”

Over the years, to help understand ABCs of money handling, I developed a 100-questions questionnaire that I use as I counsel couples; however, at the first meeting, I work with this 10-question quick personal financial self assessment checklist to benchmark where folks are with their ideas about money management. This quick personal financial self assessment checklist is not scientific. I developed it after years dealing with couples of different races, cultures, financial states, and it has proved reliable.

To get a good personal financial self assessment, and benefit maximally, I stress the need to answer each question honestly. I ask folks to give themselves one (1) for “never or rarely,” two (2) for “sometimes,” and three (3) for “often.”

  1. Do you work with goals, plans, and budgets?
  2. Before spending, do you follow a specific procedure to decide the need to spend, and the affordability?
  3. Before spending, do you ensure your primary spending driver (the influence to spend) is not to save money through using available coupons, discounts, deals, or sales?
  4. Do you use maximum one credit card only?
  5. Do you pay your credit card balance fully?
  6. Do you borrow for vacations? Using a credit card and not paying the full balance monthly is borrowing.
  7. Do you avoid borrowing for items other than a mortgage?
  8. Does someone hold you accountable for handling your finances?
  9. Do you have a procedure in place to pay cash for major household assets’ purchases and replacements?
  10. Do you compare spending against plans and budgets?

With thirty (30) as the maximum score, here is my interpretation of the answers:

  1. 10-18 – Attitude shift needed
  2. 19-24 – Average, more consistency needed
  3. 25-30 – Above average, continue

10-18: Attitude Shift Needed
Normally, you have several credit cards, different accounts to get cash back. You fall in debt, repay, get a breather, and then drift deeper in debt. Sales, deals, financing arrangements, and the merchants and money parts of the money triangle entice you, though at first you don’t recognize it. You, friends, colleagues might see you as good with finances. However, you have not realized that merchants succeeded in getting you to spend based on financial incentives (financial engineering). You do not decide to spend based on lifestyle-based goals, plans, and budgets.Knowingly or unknowingly, you are spending to ‘save.’

If you approach this exercise with an open mind, don’t worry. You will realize the need for the attitude change from financial engineering to lifestyle management. As well, you will see the need to develop and apply consistently, a spending decision procedure, and to get an accountability partner. Otherwise, you will be stuck in the debt cycle. Change will take time. By God’s grace, you can break the debt pattern.

19-24: Average, More Consistency Needed
You know money management is lifestyle management. You have one, or at most, two credit cards which you pay fully each month. You follow a specific spending decision procedure. You work with a budget. And merchants do not attract you with sales and deals. Typically, you have two challenges: Consistency generally, and you lack a process to plan to buy the next car, and major assets for cash– a capital fund.

25-30: Above Average, Continue
Like the previous category, you know money management is lifestyle management. You have a capital fund, an accountability partner, and you do not get caught by merchants’ seductive advertising. You have one credit card. However, like each of us, you mess up sometimes. But you stay debt free apart from a declining mortgage.

Download this quick personal financial self assessment checklist. It is not a panacea. But it’s proven to be an excellent assessment of an individual’s attitude to household finances. It’s been a great platform to allow folks to stop and reflect on changes, if any, they need to implement to improve handling their personal finances.

© Copyright 2013, Michel A. Bell

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