People who ask themselves five basic questions can predict from the answers their personal financial health and wealth, the Federal Bank of St. Louis notes.
It’s especially important to consider asking yourself these questions now that this year is coming to a close and people can make resolutions for the New Year. Those questions are:
▪ Did you save any money last year?
▪ Did you miss any payments on any obligations in the past year?
▪ Did you have a balance on your credit card after the last payment was due?
▪ Including all of your assets, was more than 10 percent of the value in liquid assets?
▪ Is your total debt service (principal and interest) less than 40 percent of your income?
William Emmons and Brian Noeth explain their “financial health scorecard” in the latest issue of In the Balance, a publication of the St. Louis Fed. Participants in the Federal Reserve Board’s Survey of Consumer Finances have answered the questions from 1992 to 2013.
From the responses Emmons and Noeth found that educational attainment was not as strongly associated with financial health and wealth as either age or race and ethnicity.
“Older families generally had greater financial health and wealth than younger and middle-aged families for any given race, ethnicity or level of educational attainment,” a release on the report said. White and Asian families had greater financial health and wealth than Latino and African American families for any given age or level of education attainment.
For more information on the center and its work, go to www.stlouisfed.org/hfs.