Tuesday, April 28, 2009

How to test your financial stability


Posted by Stephen Mills; Group1A

"The ideal situation is that you prepare when you still have time," said Karin Maloney Stifler, a certified financial planner with True Wealth Advisors in Hudson, Ohio.

The rule of thumb is that you should maintain an emergency fund of three to six months of living expenses. But emergency funds are often an ideal rather than a reality. And with the ranks of unemployed in March being out of work for an average of 5 months, chances are you'd have to dig deeper.

To gauge your ability to pull through a financial calamity, work through the four steps below. For each, rate your strength on the topic from 1 to 5. Give yourself a 1 if that aspect of your finances couldn't provide any help in an emergency; give yourself a 3 if you feel the area could use some work; and rate yourself a 5 if you feel entirely comfortable with that part of your financial plan.

If you score less than 3 on more than one area, it might be time to start fortifying your financial plan.

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