Test Your Spending Habits
Are you a savvy spender? Do you want to be one? Take this test, find out, and learn how to improve your spending habits—unless you already mastered the art of savvy spending!
In 2002, I found this quiz at MSN Money and took it with abysmal results. Unfortunately, a few of the answers got cut off from my copy (e.g., No. 19. c.), so I’ve had to improvise a bit; and, I also didn’t keep my exact scores, or what I picked.
Anyhow, I do recall that I did very poorly on this test. But, at least I started to get an inkling of how I could change my thinking about spending to eventually fix that big ugly growing gap between my income and my debts. So, please don’t be discouraged if you also perform poorly on this test. Look at it as an early warning, or as a last-minute—but very lucky—wake-up call, to get you back on track toward financial independence and realizing your big dreams!
SAVVY SPENDING QUIZ
1. When planning your annual vacation, you:
a. Go “all out,” reasoning that your job is stressful and you need the relaxation, no matter what the cost.
b. Wait until the last minute and always feel that you spent too much and that it wasn’t really worth it.
c. Always mean to take a vacation, but when the time comes, you usually decide you can’t spare the money.
d. Use money set aside in your budget for leisure.
2. When you receive your paycheck you:
a. Go on a shopping spree; you’ll pay the bills later.
b. Pay off all the bills that have been piling up since your last paycheck and find there’s nothing left.
c. Put it all in savings.
d. Have money skimmed off the top for your 401(k) plan and various pre-tax spending accounts for medical and dependent care. You then put money in regular savings and college accounts for the kids. What’s left is allocated among your budget items, with discretionary items like entertainment at the bottom.
3. When your favorite sports equipment (computer equipment, audiophile equipment) store announces a going-out-of-business sale, you:
a. Call to check the credit limits on all your cards and get in line early the first day of the sale. You plan to spend big.
b. Buy your dream equipment; you’ll skip your vacation this year.
c. Stay home. You don’t trust yourself at sales.
d. Check your mental list of equipment you were planning to buy over the next year and decide what you will buy now.
4. Which of the following offers the highest interest rates?
a. Treasury bills.
b. Bank certificates of deposit.
c. Bank money market.
d. Money market mutual fund.
5. What is the highest interest rate you pay on a credit card?
a. You take what you can get.
b. 18%.
c. 5.9%, because you switch cards to the lowest introductory rate every few months.
d. 10%, but it doesn’t matter because you pay off your credit bills each month.
6. Which best describes the way you make purchases?
a. You’ve noticed a pattern of spending when you’re happy or spending when you’re sad.
b. Sometimes you worry that you don’t have the same things as your friends and then you spend to catch up.
c. You spend in cycles, running up credit card debt and then paying it down.
d. You budget for your spending, allowing for a few extravagances along the way, but generally buy only what is on your list.
7. What portion of your income do you save? Include retirement plans, college accounts, an emergency fund and regular savings.
a. Nothing.
b. 2 to 3 percent.
c. 10 to 15 percent.
d. 50 percent.
8. Add up all your debt—home mortgage, second home, cars, credit cards. Don’t include items such as food or utilities. What percent of your monthly income does it represent?
a. Not sure.
b. 35 percent.
c. About 40 percent.
d. 50 percent.
9. When you get a raise, you typically:
a. Don’t notice.
b. Go on a shopping spree.
c. Promise yourself again that you will draw up a budget.
d. Treat yourself to dinner out or some item you’ve been wanting and then allocate the rest to savings.
10. When you think about your financial situation, you feel:
a. You think about it only late at night when you can’t sleep.
b. Hopeless. It seems that you keep falling further behind.
c. Optimistic. You’re buying lots of things and soon you’ll be able to start saving.
d. Confident. You’re meeting the targets you’ve set for yourself.
11. A friend calls to tell you about a once-in-a-lifetime ski weekend. You have nothing set aside for such a trip. You:
a. Accept. You’ll figure out the details later.
b. Review your credit card balances and try to get enough money from cash advances.
c. Decide to take a loan from your 401(k), your dad, your girlfriend. You’ve got to go!
d. Decline and promise yourself that you’ll start a ski fund.
12. It’s holiday time. You:
a. Get drunk. You’re still paying for the 2000 holiday and your cards are charged to the limit.
b. Apply for two more credit cards.
c. Vow that you won’t overspend by as much as last you did last year.
d. Pull out your budget from last year and inflate it by the consumer price index or the size of your last salary increase.
13. When the monthly bills come in, you:
a. Put them off until the second notice and then pay the minimum.
b. Pay the minimum on each one and throw it in the trash.
c. Pay them once a month.
d. Don’t even notice. You have arranged for automatic bill payments online.
14. You get a pink slip at work. You:
a. Go on a shopping spree to cheer yourself up.
b. Plan the vacation you haven’t had time for.
c. Try to arrange for higher credit limits and a home equity loan.
d. You arrange for continued medical benefits from your company, and while, worried, you can at least pat yourself on the back for accumulating money in your emergency fund.
15. You’ve just been recruited for your first job after college. You:
a. Decline to sign up for the company’s 401(k) plan; retirement is a long way away.
b. Borrow from your parents to buy a smashing work wardrobe and a new car.
c. Arrange for lines of credit.
d. Draw up a budget and arrange to save 10% of your salary.
16. You’re expecting your first baby. You:
a. Buy a bigger house.
b. Treat yourself to a last super vacation as a couple.
c. Feel depressed; you’re not financially successful enough to be a parent.
d. Draw up a new budget.
17. Which investment portfolio is likely to earn the best return over 10 years?
a. 100% bank certificates of deposit.
b. 40% stocks, 30% bonds, 30% Treasury bills.
c. 50% stocks, 50% bonds.
d. 85% stocks, 15% bonds.
18. You’ve just received a $100,000 inheritance. You:
a. Adjust your portfolio of stocks and bonds, making it slightly more conservative. You don’t need to take so many risks now that you have more capital.
b. Feel anxious. Dad didn’t really enjoy his life because he was always scrimping and saving to leave that money to you.
c. Go on a trip around the world.
d. Quit your job and start the business you’ve been dreaming about.
19. You’re shopping for a home. You:
a. Realize you’ll never own a home because your credit rating is too seriously impaired.
b. Go for broke; you’ll grow into the payments.
c. Borrow money from family or friends to buy a slightly bigger house than you can afford.
d. Decide how much house you can afford before you shop and stick with it.
20. When you make a large purchase, you typically feel:
a. Elated, then let down.
b. Regretful. You probably didn’t make the right decision.
c. Depressed. You really don’t deserve anything that costs so much money.
d. Satisfied. You did your research and planned for it.
CONCLUSION
When I took this test in 2002, I had no idea what CDs, money market funds, mutual funds, or Treasury bills were. That’s how clueless I was about finances! It also took me many more years to get a handle on my outrageous spending habits. But, this test was nevertheless the red flag that at least got me thinking about the problem.
I kept it, hoping someday to be able to answer all the “d.’s.” Then, a couple of weekends ago, when I was decluttering and reorganizing my file cabinets, I found this again and retook it. I was pleasantly surprised to be able to check off a whole lot more “d.’s” this time. What seemed impossible for me to accomplish seven years ago is now, after all that time and a lot of struggle in between, easy, after all!
Change your thoughts to change your words—to change your actions—to change your habits, and you will change your destiny. Be awesome! Be your own hero!
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