Financial Fitness Study Shows Strengths, Weaknesses
Many people like to want to measure their accomplishments in relation to accepted standards and guidelines. To help consumers assess their progress in the areas of personal finance and nutrition, diet, and health, Rutgers Cooperative Extension has several interactive Web-based tools. The URL for the home page for these assessment tools is www.rce.rutgers.edu/fcs/assessmenttools.asp. This article describes the results of the online Financial Fitness Quiz during the first six months of 2002 and compares the results to similar data collected between January - June 2001.
The Financial Fitness Quiz consists of 20 statements where respondents are asked to select a response that best describes their current financial management practices. Of these questions, 19 are answered with the following responses: 5= always, 4= usually, 3= sometimes, 2= seldom, and 1= never. For the remaining question, "I have a current will," respondents write 5 for "yes" and 1 for "no."
At the end of the quiz, the following explanation is given of respondents' scores:
0 to 20 points: You need lots of help, but don't despair. It's never too late to take action to improve your finances.
21 to 40 points: You are headed for financial difficulty. Now is the time to reverse the trend.
41 to 60 points: You are doing a fair job of managing your finances and have taken some steps in the right direction
61 to 80 points: You are doing a good job and are above average in managing your finances.
81 to 100 points: You are in excellent shape. Keep up the good work!
Results were obtained from 469 online quiz takers between January and June 2002. The average quiz score for the sample was 64.98%, down from 67.34% the previous year with a sample of 173. Responses to each question were also analyzed to determine the strengths and weaknesses of respondents' financial behaviors. The average scores for each of the statements ranged from a low of 2 (things that people do less frequently) to a high of 4.82 (frequently practiced financial behaviors).
Three basic practices that financial professionals routinely advise, preparing a written budget or spending plan (score of 2.69 and 2.59 in 2001 survey), calculating net worth annually (score of 2.49 and 2.68 in 2001 survey), and writing down financial goals (score of 2.12 and 2.24 in 2001 survey) were among those with the lowest average scores. Many respondents indicated that they did not perform these activities on a regular basis. Another low-scoring financial practice was having three months of expenses set aside in a readily accessible account (score of 2.58 and 2.81 in 2001).
In addition, the lowest-scoring financial practice, preparation of a will (score of 2.01), mirrors reported statistics that indicate that about 70% of Americans die without a will. Whether it is because they don't want to face their own mortality, don't think they are "affluent enough" to need a will, or are unsure about who to name to key positions, such as executor or guardian, more than two-thirds of the sample (and Americans in general) are on track to die intestate and have the state settle their affairs.
On the other hand, there were also several strengths in the financial practices reported by respondents, including the use of bank or credit union accounts, the ability to pay household expenses, and adequate insurance. Many also reported comparison shopping, organizing financial records, and funding a personal retirement investment account.
The financial fitness quiz is available online at www.rce.rutgers.edu/money/ffquiz. Printed copies are also available by sending a self-addressed, stamped envelope to Rutgers Cooperative Extension, 3 High Street, First Floor, Newton, NJ 07860. Forms to calculate your net worth, develop a spending plan, track household expenses, and set specific written financial goals are available online at www.rce.rutgers.edu/money2000.