The score is represented by a percentage which is a summary of your habits in relation to the 7 groups relevant to your personal finance. As the score is percentage-based, your highest score can be 100%. The percentage score is derived using your answers to the questions posed to profile your habits in each of the 7 habit groups.
To facilitate easy understanding, the report also provides your ranking along with the percentage score. The rankings are categorized as ‘At Risk’, ‘Stable’ and ‘Going Strong’. The simple formula is that a higher percentage denotes better money habits which in turn implies better financial health.
If your score ranking is ‘At Risk’, then it means your money habits need your immediate attention.
If your score ranking is ‘Stable’, then it means you are already nursing good money habits and need a well-directed guidance to help you make it better.
If your score ranking is ‘Going Strong’, then you seem to be doing most things right for now and need to keep the good work going.
All the 7 tests do not collect any personally identifiable information from you and hence you need not worry about the confidentiality of your personal data. No details like PAN, Aadhar, Bank account number, Bank balance etc are collected in any of our tests. The tests are designed to collect information to help profile your habits only.
The Money Habits score is not calculated using any of your personal information and relies on self-reporting. The score is derived using your answers to the specific questions asked in the tests and hence your answers directly determine your score. Any question answered wrongly can have an impact on your score.
Your habits in each of your personal finance groups like Insurance, Investments, Succession, Budgeting, etc. has a direct impact on your score. Your day-to-day decisions and practices in relation to your money are the only factors that can make or break your score.
Money habits is run by ARMH Financial Consulting Services LLP and is the brainchild of its founder, Arvind Rao. Money habits is the result of Arvind’s more than a decade’s experience in helping 100+ families with their personal financial management. During his regular interactions with these families, Arvind discovered that more than financial knowledge or timing the markets, it is an individual’s money habits that leads them to path of financial security.
Arvind Rao is a Chartered Accountant and Certified Financial Planner by qualification and is SEBI Registered Investment Adviser.
You can improve your score by developing good money habits, which is the basis for long-term financial security. It is advisable to follow these 4 steps which will help you better your score:
1. Know the various pain areas for your personal finance;
2. Prioritize the pain areas in terms of its impact on your finance;
3. Consult your trusted financial advisor with your 3 top priority problems; and
4. Work together with your advisor to set-up a process to solve these problems.
Personal finance problems are like slow poisons, they only show their effects with a time lag.
Yes, once you have identified your pain area and have worked out a plan to improve your habits, you should attempt the applicable pain area test again to check your score. This will help you to measure your improvement.
Your investment decisions are directly correlated to your money habits. An improvement in your money habits has every potential to help you make informed decisions in relation to your investments.
Money Habits score is different in three ways:
- One, it helps you profile your habits to understand the root cause of your pain areas;
- Two, it does not collect any of your personal information; and
- Third, it gives you a percentage score which you can use to track your improvement over time.
Money habits score is like your score in school tests, you can always aim to do better in the next one.