CNN is featuring a short survey to help you determine your level of financial health. The result is presented in a form of a grade from F to A+. My result was an A; I lost points for not having any life insurance. The survey does not ask if there are any dependents. Right now, I am the only person depending on my income for survival.
The survey questions visitors about annual income and your age in order to determine the healthy expectations for the other categories. For the highest score, your monthly housing payments should not exceed 28% of your gross income. That’s almost unheard of for many people who purchased houses in the past few years. Monthly debt payments should not exceed 36% of your gross income. CNN further suggests three months’ worth of expenses in a high-yield savings account. The editors also subscribe to the rule of thumb that suggests the percent of your portfolio invested in stocks should be 120 minus your age.
Also related to diversification, you will lose points if you have more than 10% invested in your employer’s stock. For life insurance, a category where I failed according to CNN’s algorithm, you should have enough coverage to provide a replacement for your income for at least 5 years, 10 years if you have multiple dependents. The survey asks about your contributions to and balance of your retirement account. If the combination of the two, while taking your age into account, results in a favorable outcome as judged by CNN, you will pass this question.
Here are my results.
Take the survey here and share your results!