This Quiz Will Help Give You a Pulse on Your Finances

This post is sponsored by Charles Schwab & Co., Inc (Schwab), Member SIPC.

I recently got a chance to visit a Charles Schwab office, gain some additional financial knowledge, from one of their VP’s & Branch Managers, Dan Stein and learn all about the Modern Wealth Index! Check out the interview:

Dominique: How long have you been in the financial services industry and what inspired you to pursue this career?

Dan: I started working for Charles Schwab 12 years ago, after working in the real estate space for a few years in Arizona. All my friends were at Schwab, so I joined as a registered representative trainee and have been with the company ever since, working for a few different business units. I’ve always been passionate about doing what I can to help clients, so Schwab’s mantra of “seeing through clients’ eyes” has really resonated with me.

Looking back at these past 12 years, I’m very proud to be part of the Schwab family – Schwab has been flexible as both my wife and I have moved around the firm and truly embodies a family-first culture.

Dominique: $2.7 million is the amount you need to “be wealthy” in the Washington DC area, based on what you see on a daily basis – do you agree?

Dan: I sometimes have clients come in, and I talk to them about what they’re doing to manage their wealth. That term often throws people off because we so often associate the word wealth with a large, unachievable amount of money. They think, well I don’t have wealth to manage. But in today’s world, the truth is we all have wealth. It’s whatever we have now and even goes beyond a monetary value.

For me, being wealthy means having a career I enjoy and spending time with my family. But no matter how we define wealth, it’s important that we pay attention to our money—we need to save and invest the money we have to grow it and achieve our goals and personal definitions of wealth.

Dominique: So many people feel as if they do not “have enough money” to even think about a financial plan. When do you think is a good time to begin planning and start thinking about one?

Dan: The sooner you can begin thinking about your financial plan and goals, the better. Planning is critical to achieving any goal. It’s like establishing an exercise regimen to get in shape − we need to take the same approach to keep our finances in good health and on track.

Furthermore, the idea that financial planning and wealth management are just for millionaires is one of the biggest misconceptions. For people just starting out, planning may be about sticking to a budget so that you can start saving and pay down any debts, but your plan will evolve as your finances and goals change.

Finally, we know that planning can lead to better daily money behaviors. According to the Modern Wealth Index, “Planners” in the DC area are more likely to have a higher overall Modern Wealth Index score, be regular savers, and effectively manage their debt. For instance:

68 percent of planners said that they pay their bills and still save each month, compared to just 44 percent of non-planners.

57 percent of planners said that they have an emergency fund in place, while only 44 percent of non-planners identified having a backup fund.

Dominique: 88% of people with a plan feel confident about reaching their goals, what’s a good first step for people who are thinking about getting started & how can Charles Schwab support them in their journey?

Dan: If you’re starting out, think about your financial goals—both what you want to achieve in the short-term and the long-term. Once you identify your goals, you can start planning on how to achieve them. Your financial plan is like a roadmap—it forces you to develop a realistic and informed perspective on where you are, where you want to go, and how to make the best use of your resources to get there.

Also, think about talking to a financial professional. It’s not going to be a conversation all about numbers and tedious charts. It’s about your goals and your passions—and how to achieve them.  

A fun way to get a pulse check of how you’re doing with your finances is to take our Modern Wealth Index quiz. It’s 16 multiple choice questions and takes a few minutes, but you can get some helpful insights on what to think about and what to do next. You can take the quiz at www.schwab.com/mymodernwealth.

Dominique: What’s the best advice you can give to a millennial on their financial journey?

Dan: I think the best advice I can share would be to think about your finances—don’t ignore them. And the best way to do that is to get that financial plan. When just starting out, your plan might be more basic and focus on budgeting and saving, but establishing a plan based on your current situation will keep you on track, help you prioritize your goals, optimize your savings and help you figure out how and where to invest.

I’d also add that millennials should start saving and investing today. It pays to start now – literally, as you can capitalize on compound interest. Time in the market is key to growing savings over time.

Finally, something we talk about a lot here at Schwab is “ignoring the noise”. Stay focused on your plan and don’t pay too much attention to short-term portfolio performance, market ups and downs or the press. Millennials have 30+ years to save and invest, so progress toward your goal is more important than short-term performance.

Dan Stein, CFA®, CFP®, is Branch Manager at the Charles Schwab location in Bethesda.

Dominique Broadway is unaffiliated with Schwab.

The Modern Wealth Index, developed in partnership with Koski Research and the Schwab Center for Financial Research (a division of Schwab), is based on Schwab’s Investing Principles and composed of 60 financial behaviors and attitudes – each assigned a varying amount of points depending on their importance. The Index broadly assesses Americans across four factors: 1) goal setting and financial planning, 2) saving and investing, 3) staying on track, and 4) confidence in reaching financial goals. Based on the total number of points received, respondents were indexed on a 1-100 scale for each of the four factors and an overall score.

The online survey was conducted by Koski Research from April 12 to April 20, 2017, among 1,000 Americans nationwide and from July 24 to August 10, 2017 among 755 Washington, D.C. area residents, aged 21 to 75. The geographical area of the sample included all the Maryland, Virginia and D.C. counties in the Washington, D.C., Metropolitan Statistical Area. Quotas were set so that the sample is as demographically representative as possible. The margin of error for the total survey sample is three percentage points.