Do You Speak Financial?

The “Smart Women Finish Rich” Financial Knowledge Quiz from the book of the same title, by David Bach. It is geared to American women, but is still an illuminating test.

Answer True or False to the following questions: (I won’t tell you my score but it was fairly close to my shoe size…)

1. I know the current value of my home, including the size of the mortgage and the amount of equity I’ve built
2. I know the length of mortgage-payment schedule and how much extra it would cost each month to pay down the mortgage in half the time.  I also know the interest rate we are paying on the mortgage and if it is competitive in today’s market
3. I now how much life insurance I (and my spouse) carry.  I know how much cash value there is in the policy and I know the rate of return my cash value is earning.
4. I know the details (including amount of coverage, cost, monthly or yearly payment etc.) of all other insurance policies carried by myself (and spouse).  This includes, health, disability, term life and so on.
5. I have reviewed my life insurance policy in the last 12 to 24 months to see if the price I am paying for it is still competitive in today’s marketplace.
6. If I own my own home, I know what kind of home owner’s coverage I have and what the deductibles are.  In the event of a fire, death of a spouse, job loss or other catastrophe, I know whether my insurance will reimburse me for the actual cash value of the property or the cost of replacing it at today’s market values.
7. I have attempted to protect my family’s nest egg from lawsuits by carrying an umbrella insurance policy that includes liability coverage.
8. I either prepared my own tax return this year or review my tax situation with the person who prepared my return
9. I know the location and amounts of all my or may family’s investments, including:  cash in savings or money market, GICs/savings bonds, stocks & bonds, real-estate investments (mortgages), collectibles
10. I know the annualized return generated by each of the above investments
11. If I or my family owns a business, I know the current valuation of the business, including how much debt it currently carries and the value of its liquid assets.
12. I know the value, location and performance of all my retirement accounts (and your spouse), including RRSPs, pension plans etc
13. I know the percentage of income I am putting away for retirement and what it’s being invested in – and how much my spouse is putting away and what he is investing in.
14. I know if I am making the maximum allowable contribution to my retirement plan at work, whether my employer is making matching contributions, and what the vesting schedule is.
15. I know how much money I and my spouse will be getting from the Canada Pension Plan and Old Age Security and what my and my spouse’s pension plan will be.
16. I know whether my and my spouse’s income is protected should I/spouse become disabled because I own disability insurance.  In addition, I know what the exact coverage is, when the benefits would start and whether the benefits are taxable.
17. I / my family maintain a safety deposit box, know how to gain access to it and have reviewed its contents in the last 12 months.  I I have the only key, other family members know where to find it if something should happen to me/spouse.

Scoring:  Give yourself 1 point for every time you answered “true” and 0 for every time you answered “false”

14 to 17 points:  Excellent!  You have a good grasp of where you money is

9 to 13 points:  You’re not totally in the dark, but here are some areas in which your knowledge is less than adequate

Under 9 points:  Your chances of being hurt financially because of your insufficient knowledge are enormous. You need to learn how to protect yourself from future financial disaster.