How Smart Are You With Money? 7 Steps To Get Your Finances In Order

06/17/2015 01:28 pm ET | Updated Aug 24, 2015
James Brey

More than one third of adults admit they spend more than they can afford, and it's been estimated that 70 percent of Americans are living paycheck to paycheck. Are you one of them?

“You cannot be in denial about finances,” Dr. Phil says. “It doesn’t matter what you think you deserve, what you think you need, even, and certainly doesn’t matter what you want or desire. When you’re dealing with finances, you’ve got to deal with reality.”

If you worry about surviving tough financial times, take these quizzes to evaluate your spending habits. Then, consider these seven steps to get your finances in order so you don’t find yourself broke.*

Are You a Financial Train Wreck?
Answer true or false to the following statements:

  • I will neglect bills to make an impulse or luxury purchase.
  • I will make a purchase based on my perceived need, desire, or what I feel I deserve, instead of what I can afford.
  • I buy items out of guilt for my children, whether or not I can afford them.
  • I buy name-brand goods because of the emotional feeling.
  • I sometimes finance toys for myself — boats, RVs, four-wheelers — or vacations.
  • I use borrowed money, such as credit cards, to make payments on items I have already financed.
  • I charge basic living expenses: mortgage, car note, student loan, tax bill.
  • I buy things based on monthly payments instead of actual cost.
  • I lack a budget or plan based on my financial reality, and lie to myself or spouse about expenditures.
  • When I'm stressed out, anxious or celebrating, I spend money I don't have.

If you answered true to any of these, you have an unhealthy spending habit. If you answered true to five or more, based on statistics, you are headed for serious financial troubles.

How Smart Are You With Your Money?
Answer yes or no to the following questions:

  • Are you living on borrowed money or credit cards to cover living expenses, and fail to pay off the balances at the end of the month?
  • Are you a double-income family that requires both incomes to maintain your lifestyle?
  • Will your health insurance cover you if you suffer a significant or catastrophic illness?
  • Do you have enough savings to cover your expenses in the event of a layoff or injury?
  • Do your monthly expenses exceed your stable net income?
  • Do your total housing payments, long-term debts and major fixed expenses exceed 60 percent of your income?
  • Are you accruing tax debt by not making timely deposits, because you are spending more than your net income?
If you answered yes to more than three of these questions, it is time to reevaluate your spending habits. Don't live in fiction — know now and make the corrections so you don’t have a money crisis.

7 Steps To Get Your Finances In Order
1. Always set aside at least 10 percent of your income for savings and investing, using the payroll deduction method.
2. Always contribute the maximum amount of money to employer-sponsored pension plans, in order to get the maximum contribution from your employer every year.
3. Always use manufacturer's and retailer's coupons when possible, and send in for rebates.
4. Always look over sale flyers and comparison shop before spending money, especially on food.
5. Always comparison shop motor vehicle and household insurance policies when they come up for renewal.
6. Always pay credit and charge card purchases in full when the statement arrives, and never pay interest charges or penalty fees of any type.
7. Always keep banking and other receipts, even for smaller purchases, and note the details of the purchase on the receipt.

* This information in this article is provided for your consideration and information only. You should always consult with financial professional before making any significant financial decisions.

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