Author: Patrick Blair
“Therefore everyone who hears these words of mine and puts them into practice is like a wise man who built his house on the rock. The rain came down, the streams rose, and the winds blew and beat against that house; yet it did not fall, because it had its foundation on the rock.
But everyone who hears these words of mine and does not put them into practice is like a foolish man who built his house on sand. The rain came down, the streams rose, and the winds blew and beat against that house, and it fell with a great crash.” -Matthew 7:24-27
Jesus ended his Sermon on the Mount with this parable about having a solid spiritual foundation. If you put his teachings into practice, you build your house on solid rock. Otherwise, you build on sand, leaving your house vulnerable to destruction from the inevitable storm.
I’m borrowing the metaphor for this test to see how solid your finances are. It’s not enough to have financial knowledge; you need to put that knowledge into practice. Financial storms are inevitable, and you want to be ready.
Test: (1 point each)
1. I pay all my bills on time.
2. I don’t carry credit card balances or other consumer debt.
3. I have no debt that has more than a 5% interest rate.
4. I have a budget and review it against my real finances at least quarterly.
5. I have a positive net worth (my total assets are greater than my total debt).
6. In the last 12 months, I have spent less money than I made.
7. I have an emergency fund of 3 months or more (count all liquid assets not in pre-tax accounts).
8. I have an emergency fund of 6 months or more.
9. I have an emergency fund of 12 months or more.
10. I am properly insured with adequate health, life, home, auto and disability insurance (where applicable).
11. I give to my church regularly (more than a nominal amount).
12. I give to the poor and needy regularly (more than a nominal amount).
13. I have a diversified investment portfolio, which includes some non-correlated or inversely correlated assets.
14. I have a truly diversified investment portfolio, which also includes assets without counterparty risk.
Extra Credit: (1/2 point each)
a. I have no debt, except my home and auto loan (if applicable).
b. I have a credit score of 740 or more.
c. Beyond regular church giving and regular charitable giving, I periodically give extra to meet situational needs (e.g. meet special emergency needs of neighbors, church members, those in the community or para-church organizations; special acts of generosity).
d. I have implemented my estate plan (e.g. wills, trusts, powers of attorney, advanced directives).
*My Finances Are:
14+ Solid Rock (A+)
11-13 Sturdy Rock (A)
8-10 Red Clay (B)
5-7 Gravel and Mud (C)
0-4 Shifting Sands
*Please note that this a basic evaluation that does not account for age, education, job prospects, life situation, risks, debt ratios, investment amounts, or other complexities. If you are younger, you will typically have a tougher time doing well on this test. You also have plenty of time to work on things!
Keep in mind that this doesn’t test if you are a good or bad person. It’s only useful for generating ideas and motivation to solidify your finances. To learn more, please read my book Faith and Finances. Also, check out this promotional video for my new church course: Building Faith and Finances.
Contents of this material have been republished with permission from Faith and Finances Ministry.