After a certain point in all of our lives, we have to take responsibility for our financial decisions and financial situation. There really isn’t an excuse to not know certain things about your finances. There are a few money questions to have answers for, and if you don’t, your mission should be to get the answers as soon as possible.
We are at a place where we need to take life into our own hands, ladies! We can’t rely on others to do things for us, take care of us, or give us what we want without asking. I’m sharing 5 money questions to have answers for, so you can take the proper steps to getting everything you want out of your life and your finances!
Money Question #1: What is your net worth?
I’ve written plenty of articles about net worth, but as a reminder, your net worth is the value of your assets less the value of your debts. If you have more debts than you do savings, then you very likely have a negative net worth. If you have no debt, but also no savings, you could have a net worth of $0.
The point is, you should have an understanding of what your asset and debt situation looks like, and what that means for your personal value. If you’ve never taken the time to calculate your net worth, the time is now. Once you know what you’re working with, you can start taking the steps to boost your net worth.
Your net worth is ultimately the legacy you will leave behind. You don’t want the people who can rely on you to have to worry about things when you’re gone. Start the process of building your wealth as early as possible. If you are young, or have debts, start by getting to a debt-free life. It’s much easier to save money when you don’t have to worry about debt.
Money Question #2: Are you on track to retire comfortably?
This is another common money question I’ve written about before. Honestly answer if you are on track to retire comfortably. If you don’t know what “retire comfortably” looks like to you, think about your current situation. Are you living comfortably with the income you make now? What if you added a mortgage into the picture?
Although retirement may be decades away, the actions you take right now to make sure you can retire when you want, make the most difference. This can be scary to think about, especially if you are used to taking your finances day-by-day. Read the article Are You On Track to Retire to see if you are at least on par with most people in your age bracket.
If you can’t determine what you want your retirement to look like at this point in your life, make the executive decision to contribute 10% of your income to your 401k or IRA. This is a number most experts recommend, and will be a good substitute until you take the time to think about what income you will need during your retirement years.
Money Question #3: What is your credit score and why?
There is no excuse not to know what your credit score is on a monthly basis. Most credit card companies offer free credit score monitoring, just for being a customer. You should always be familiar with what your credit score is, but more importantly, why it is what it is.
If your score is on the lower end, is it because you have too much debt? Could it be that you make late payments? Understand why your score is what it currently is, then take the proper steps to improve your score. Building a good credit history is not an overnight process, but you can’t fix what you don’t know is broken. Do your due diligence and understand what your credit score is and why.
Money Question #4: How much do you have saved for emergencies?
The younger you are, the less likely you are to think of something bad happening. The naivete of youth is bittersweet. Just because you are young, or because you have people (like your parents) you can rely on, doesn’t mean a financial emergency can’t happen to you.
You should be able to answer how much money you have saved for emergencies. If you have nothing saved, or very little, your next step would be to change that. In the article How to Build a Successful Emergency fund, I walk readers through what they need to do to get a solid emergency fund saved.
Remember, an emergency savings should only be used in case of emergencies. This specific savings should not have multiple uses or purposes.
Money Question #5: Do you know how to create and follow a budget?
I work with women on a regular basis who have found out that they do not know how to create and follow a budget. Please don’t let that make you feel bad, embarrassed or ashamed. None of us were taught how to budget money in school, so how can we expect to have it down as adults?
While you can’t blame not learning how to budget, once you realize you struggle with it, you have to do something about it. Otherwise, you are now the problem – not a lack of education. There are plenty of resources, like City Girl Savings, designed to help you budget and manage your money. Give it a try on your own, but if it doesn’t work, seek help.
Since you will be in charge of your life and finances, you need to know how to allocate your income and control your spending. These are very important skills that can help or hurt you in the future. Master managing the money you do have, so you’ll know how to handle more that comes your way.
I offer free consultations for women struggling to budget, pay off debt, and improve their credit score. Click below to schedule a free consultation with me.
I hope this article inspires you to think about the 5 money questions above and get answers to them. These are very important facts to know about your situation, and the answers can help you determine the best way to move forward.
Do you know the answers to the money questions listed above? What are you doing to improve the answers? Leave a comment below to share your answers to the money questions!