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10 financial questions to ask yourself

You should be able to answer every single one of them, and if you can't, it's time to give them some serious thought.

By MSN Money Partner Jul 12, 2012 9:09AM

This guest post comes from Andrea Whitmer at So Over Debt.


Image: Woman looking at bills and receipts on floor (© David Sacks/Lifesize/Getty Images)I think we can all agree that personal finance is, well, personal. I can share information and examples and suggestions all I want, but when it comes down to it, I have no way to know the situation of every person who reads my writing. That's why it's rare for me to write a post talking about what you "must" do or "should" do. 


I don't live your life, so I really don't have any business dictating how you live it.


That said, today is one of those rare moments when I'm going to tell you something you should do. You should be able to answer all of these financial questions, and if you can't, you should take some time to make sure you can.


1. What is your income? Let's start with an easy one. How much money do you (or does your household) make in a month? How about a year? You'd be surprised how many people have never really added it up. When I lived paycheck to paycheck, I never thought beyond the next time I got paid because it was too stressful. But I also didn't have a realistic idea of what I could afford.


2. What are your monthly expenses? Do you know the dollar amount (within reason) of your bills each month? I didn't for a long time. I just paid the bills when they came in and prayed I didn't run out of money. When I actually sat down and looked at what I spent on things like gas and dining out, I nearly died of shock. My guesstimate of my expenses and what I actually spent in a month were two different things. (Post continues below video.)

3. What would happen if you died tomorrow? A little depressing, but it's important to have a plan for what will happen when you die. Who will take care of your kids? Who gets all your stuff? How will your family pay for your funeral? Don't assume that someone else will take care of it. The worst thing in the world is losing a loved one AND having to panic about what he would have wanted.


4. Where could you get $500 in an emergency? It's not a huge sum of money, but it can sure seem like it if you need it and don't have it. If your washing machine exploded next week or you became violently ill and needed expensive medication, where would you get the money?


5. What would you do if you got fired from your job? Again, not something anyone wants to think about. In this economy, though, you need to consider whether any job is really safe. And you need to have a tentative plan for what you would do if you suddenly didn't have one.


6. How will you live in retirement? If you're an adult and don't know the answer to this question, you're already in trouble. Unless you want to work until you're 84 years old and drop dead on the job, you should be doing something, ANYTHING, to save for old age. Even if you're saving only $50 a month, that's better than nothing. Let's face it, is surviving on Social Security alone how you want to live when you're old?


7. What could you sell to raise extra cash if needed? I'm not saying you should go sell all your stuff. But by keeping inventory of the things you could, theoretically, let go of in an emergency, you'll be able to act quickly if you ever have to.


8. Does your spending align with your values? Make a quick list of your top five ideals or values. Then make a list of the top five things you spend money on (after bills). Are you spending money on the things that matter most to you? Or are you wasting your money on crap?


9. What are you teaching (or will you teach) your kids about money? I've written several posts about this. (See here and here.) Have you thought about how your habits will affect your kids' and grandkids' attitudes toward financial issues in the future? What will they learn from you? Will that be through your words, your example, or both?

10. What steps can you take today to improve your financial situation? This one is always hard for me. I've been doing really well where money is concerned (especially compared with my former self) and sometimes it's easy to forget that there is always room for improvement. But when you get complacent and don't spend time thinking about and dealing with money, that's a perfect time for bad habits to creep in.


So, how YOU doin'?

Were you able to answer all the financial questions above? Anything you need to work on? What did I forget to include in this list?


More from So Over Debt and MSN Money:

Jul 12, 2012 1:01PM
For 4 years I thought I was making 10k less a year then I was! When my husband was discharged from the military, he and I sat down and categorized all of our spending over a few months to see where our money was going, and HOLY CRAP were we shocked to see how much small things like fast food and internet purchases (iTunes, kindle) added up to. So, now I know my income, my expenses, I have life insurance and a will so covered on #3, I got #4 too, #5 would be a tough one....i guess I need to start a 6 month emergency fund. We save 10% of our net income in a retirement acount (TSP), I have a BUNCH of crap I could sell if I needed to. #8 is hard to swallow too, a large portion of our budget went to the aforementioned crap. Dont have any kids yet (one on the way!). #10 is also difficult. Just need to make a good budget and try my best to stick to it! Not too bad for a 23 year old I guess. Hope everyone else stacks up just as good or better!
Dec 10, 2013 1:55AM
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