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10 questions to predict if you’ll be rich

(Source: Getty)
(Source: Getty)

Maybe you think you have your financial act pretty together. Or maybe it feels like you lurch from one pay to the next like Joaquin Phoenix staggers with good intentions around topics in an Oscars acceptance speech.

Well, that’s no joke… because your level of financial nous determine how relaxed or harassed will be your life.

And I’m not talking simply enough nous to know you shouldn’t be a ‘Bill D.I.L’, my term for all the hapless Aussies who let their utilities and insurance companies fleece them more every year via direct debits and Digitally Induced Laziness.

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There are just a few tips and tricks that, provided you know them, can boost your bottom line dramatically.

Then there are some poor – quite literally – practices.

This is the 10-question quiz that can predict your real fortunes… and demonstrate how you can immediately improve them.

Question 1. Your savings are:

A. Healthy. In fact, I have an easy-access Holy Sh*t fund of six months’ salary.
B. There’s a couple of grand in the bank but not much between you and disaster from a Holy Sh*t moment.
C. Non-existent.
D. I don’t need them… that’s what credit cards are for.

Question 2. Your debt other than your home is:

A. Zero.
B. I carry a little bit of personal debt, but nothing big.
C. Repayments suck up my salary every month.
D. I can’t meet my repayments anymore.

Question 3. My credit card balance at the end of the month is:

A. Zero …I flush everything I spend through my card to collect the points. And I sit my salary in an offset account beside my mortgage for that whole month too.
B. I mostly manage to clear it every month.
C. It’s a bit hefty, but I’ve transferred my balance to a card charging 0 percent for 24 months and am moving heaven and earth to pay it off in that period.
D. It’s big and the interest rate a bitch.

Question 4. My take on buy-now-pay-later services is:

A. I’d never touch them …and I know they could stop me getting approved for any loan that I want in future.
B. I used one in a really moderate way over Christmas, just to help spread the cost.
C. I’m usually repaying several purchases at once.
D. Oh, I have more than one service and love being able to pay a quarter of the price.*

Question 5. My mortgage interest rate starts with the number:

A. 2 …and when I refinanced, I kept my repayments at their original, higher level – I was used to finding that money anyway – to save tens of thousands of dollars more. For ‘free’.
B. 2 …I’m also throwing everything extra I can at my loan because this is a once-in-a-lifetime opportunity to own my home cheaper and easier than ever.
C. 3 …after I played hard-ball and negotiated a sweet discount.
D. 4 from a Big 4... they’re the best value, right?

Question 6. What do you owe versus what you own (so your assets – your home’s worth, car’s worth and any other assets or savings – versus your liabilities or debts)?

A. My assets are worth a big chunk more than my liabilities.
B. My assets and my liabilities are about equal.
C. The value of my assets has fallen below the value of my liabilities.
D. I have no real assets to speak of, but I have liabilities.

Question 7. My health insurance is:

A. The top cover for everyone in my household and I make sure I claim back every penny that I can too.
B. Decent cover but I seem to never be able to get much in payouts.
C. The minimum necessary to avoid the Medicare levy surcharge.
D. Missing [if this is your answer and you’re a higher earner and/or aged over 31, see footnote **].

Question 8. My life insurance is:

A. Enough to clear all my debts and pay to raise any dependants.
B. A random amount that sounded good at the time.
C. Non-existent [Note this is a big problem if you have dependents***).
D. What’s life insurance? ***

Question 9. My income protection insurance is:

A. The maximum 75 percent of my salary.
B. A random amount that sounded good at the time.
C. Non-existent [Note this is a problem if you have debts and/or dependents or are single****).
D. What’s income protection insurance? ****

Question 10. My super balance is:

A. Super! …I know that you get a tax discount when you contribute extra via salary sacrifice, so I’ve long been topping up my employer’s contributions to 15 percent a year.
B. Solid …and I make sure to pay in $1000 after-tax, every year that my income is below $53,564, so the government chips in up to $500 extra for me too.
C. Sickly. It’s on my to-do list to figure out how to sort the situation.
D. Super? I won’t need that because I’m going to strike it rich any day now.

Score yourself 1 point for every A, 2 points for every B, 3 for every C and 4 for every D. Then tally.

And in case you didn’t twig, each ‘A’ answer represents perfect financial practice – with supercharged strategies in square brackets – all the way through to every dunce ‘D’.

What did you score?

1-10 points: Hot

It’s so close you can almost taste financial freedom! Well done you… but you know what, maybe you need to treat yourself every now and again? No one can deny themselves everything all the time… to be sustainable, smart money management is about moderation not deprivation.

11-20 points: Warming up

You are tracking for a cruisy life. With just the bit of tactical knowledge built into this quiz (and the top tips below), your savings should swell. What small, hopefully inexpensive changes could you make from the answers that are listed higher than yours?

21-30 points: Cool (and not in a good way)

You are cruising for a lifestyle bruising. You need to make money – and, crucially, keeping it – a priority. Read the smarter strategies in the answers above yours (and the following tips) to see how you can easily ‘warm up’ your wealth.

31-40 points: Not!

Get invested and protected. Then get real about your spending, saving and repaying habits… before you regret it. Go over every A answer (and even the Bs). That’s what you should be aiming for, at least eventually.

Footnotes

*You always have to pay the entire amount, just perhaps split over four fortnights. Miss a payment and you’ll also have to pay more.

**Singles who earn over $90,000 and couples who earn over $180,000 pay an up-to 1.5 percent tax penalty – the Medicare levy surcharge – if they don’t have this insurance. Often that amount would buy some okay insurance, so it’s just silly not to instead have it... especially given that private health cover means treatment in a hospital with the doctor of your choice, with far shorter waiting lists. What’s more, if you wait to buy it until after you turn 31, the cost goes up 2 percent a year.

***Life insurance pays a lump sum to your nominated beneficiary/ies if you pop your clogs. Sure it won’t affect you, but it will mean everything to your loved ones.

****Income protection insurance replaces up to 75 percent of your salary if you’re unable to work through accident, injury or illness. It’s a must-have for just about everyone and you can opt for a long pay-delay period to cut the (significant but tax deductible) cost. Say, six months if you’ve also stashed six months’ worth of Holy Sh*t cash.

Nicole Pedersen-McKinnon is the author of How to get mortgage-free like me, which includes safety tips for first homebuyers and is available at www.nicolessmartmoney.com. Follow Nicole on Facebook, Twitter, LinkedIn, YouTube and Instagram.

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