Financial Test

Do you think you are doing your financial planning and money management right? Most of us feel we are doing everything we can to improve our financial condition, but most of us are doing the wrong thing. This is a self-financial test that will help you reach a conclusion whether you know much the principles of money management. Go through these questions below and figure out the answers.

Test 1

Financial Test

Your monthly net income (after tax) is $2500. Your home and car loans are $800 and $250 per month respectively. In average, you pay the credit card loan of $150 per month. Do you know your debt payment-to-income ratio?

Answer: 16%
Financial Test
Following the formula above, house loan ($800) is not included as debt payment as it is a long-term liability.

Rule of thumb: Do not spend > 20% of your net income on consumer credit payments.

The lower the debt payment to income ratio, the safer. It is advisable to keep this index below 15% if possible.

Using this example, if you want to bring down the number to 15%, you should then spend less with your credit card. $ 125 will be your cap in order stay right or below 15%.

Test 2

Financial Test 1

Your net income is $4500 per month. Your monthly expenses (including home and car loan) is $ 3000. How much should you have in your bank as an emergency fund?

Answer: $9000

Rule of thumb: You should save MINIMUM 3 x monthly expenses as emergency fund

Test 3

Financial Test 2

How much would you earn if you deposited $10000 at 7% for 24 months?

Answer:$1200

Rule of thumb: Check how your bank calculates the interest. Most of the time, they are based on annual interest rate (NOT Monthly)

Test 4

Financial Test

Overseas stocks are rising and they are super hot. Should you change your portfolio allocation from 10% to 70%?
Answer: NO!

Rule of thumb: The best investment strategy is a well-diversified one.

Switching portfolio during the rise of stocks is often considered a bad move, as good times do not last forever.

Test 5

Financial Test

You are now 25-year-old and deposit $100 per month in a unit trust fund with an average return of 10% per year, you will have $640000 at the age of 65.

Your brother is around 40-year-old and he wants to start saving like you do. How much does he need to deposit in order to have the same amount at 65?

Answer: $475

Rule of thumb: Start saving as early as possible. The younger you are, the better.

This simply evidences the power of compounding.

Test 6

The accounting equation is:
a.  assets = liabilities – equity
b.  liabilities = assets + equity
c.  assets = liabilities + equity
d.  revenues – expenses = income

Answer: C. assets = liabilities + equity

Assets = Liabilities + Owner’s equity is the accounting equation that must stay in balance.  When you have something, you either own it outright or you owe for it.
Above are some simple Quiz allows you to test your common sense in money management and also to remind you how one should manage his or her money.
I hope they help.

Regards,

Alex

[mc4wp_form]

Financial Test

You may also like...

2 Responses

  1. lb says:

    I think this is excellent information. This is the kind of stuff that everyone needs to learn about so as not to find themselves living paycheck to paycheck and be able to live when things go south financially. Very good site. Now let’s get the word out!

    • Alex Y says:

      Thank you!

      We all should at least learn something else to earn side income. Remember not to put all eggs in one basket, diversify not only investment but also ways of generating income.

      Regards,
      Alex

Leave a Reply

Your email address will not be published. Required fields are marked *