Give Yourself A Financial Stress Test

Why let banks have all the fun? Run the numbers on your own personal finances, suggests a certified financial planner in the Dallas Morning News, and see whether or not you’re prepared for disruptions like a layoff or sudden interest rate increase.

Lynn Lawrance of the Financial Network Investment Corp. in Dallas told the paper that answering the following questions will help you get a feel for where you stand financially:

  • Divide your current gross annual salary by $10,000—the result is how many months, on average, it will take you to find a job with an equivalent income should you lose your current one.
  • Now divide your emergency savings by your monthly expenses to see how many months you can pay for everything. Do you have enough months covered?

That’s just a quick summary of the stress test, however. You can complete the whole thing at the Dallas Morning News website, and even get a final score between 0 and 100 that will help you get a clearer picture of how worried/smug you should be.

“Face the numbers with personal financial “stress test”” [Dallas Morning News]
(Photo: stuartpilbrow)

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  1. youbastid says:

    I call retarded shenanigans. “In THIS economy”, it has a lot more to do with what you do than how much you make to figure out how long it will take you to find a job should you become unemployed. Just lost your job and you’re an investment banker? Good luck, buddy. Just lost your job and you’re a lawyer? Give it a month or two.

    • Hil-fish says:

      @youbastid: Depends on the kind of lawyer. My brother-in-law does patent law and is having a wicked hard time finding work. New lawyers are finding the job market stinks for them right now. Established lawyers will likely have an easier time, but if you’re young or do specialty law, it’s a lot harder.

  2. Cant_stop_the_rock says:

    Dividing your salary by $10,000 is about the most arbitrary and inaccurate method of determining how long it would take to find a job that they could pass off as plausible. Throw that number out and replace it with at least a 12. Proceed to step 2.

    • P_Smith says:

      @Cant_stop_the_rock: It also falsely presumes that someone is going to do a Randy Quaid (a la “Vacation”) and hold out for an executive position rather than take a temp job to slow the financial bleeding.

      Half income for two months is better than none.

  3. Mike Graham says:

    I would agree with the doubters.

    A software developer in Seattle with 5 years of Java experience, will see common salaries that are about 70K to 90K. I very much doubt it would take 7-9 months to find a new position here in that field.

    But everything is bigger in Texas: salaries, stints of unemployment.

    • Hil-fish says:

      @Mike Graham: I’m with you. Federal contractors with security clearances make crazy money and are eminently hireable at almost any time. a lot of engineers are the same. I would think it’s harder for people in non-technical work, but this methodology is absurd.

  4. HeatherLynn30 says:

    I don’t understand the math in the first bullet point. What does my salary have to do with how long it would take me to find my next job?

  5. laughingisfree says:

    maybe i should start sporting my hoover flags

  6. Quilt says:

    I’d hate to be a student with no source of income in this situation. Mind you…
    $0.00 / $10,000.00 = 0 months

    Wow. A student can get a job instantly in this economy. Or at least one with a similar pay rate…volunteering that is.