The place to start is at home -- the time to start is now
The best way for the two of you to begin this process is by examining what you each know about your finances -- and what you don't know. After all, before you can start planning how to get more out of your money and how to invest it wisely, you need to know exactly how much you've got, where it's currently parked, and just how accessible it is. You also need to understand what kind of financial commitments the two of you have -- both separately as individuals and jointly as a couple.

To aid you in this task, I have created a simple true-false quiz that the two of you should both take. Take it separately -- and be honest with yourself -- then compare your answers. The goal isn't to get a high score or beat your partner; it's for both of you to discover how accurately (or inaccurately) you understand your current financial situation.

True or false:
1. I know our current net worth (i.e., the value of the assets we have minus the liabilities we owe).

2. I have a solid grasp of what our fixed monthly overhead is, including property taxes and all forms of insurance.

3. I know how my partner feels about our monthly overhead. We have discussed both the size and nature of our regular expenses and obligations, and are comfortable with them.

4. I know how much life insurance my partner and I carry. I know exactly what the death benefits are, how much cash value there is in our policies (if any), and what rate the money is earning (if applicable).

5. I have reviewed our life insurance policies sometime in the last 12 to 24 months, and I am comfortable that we are paying a competitive rate in today's insurance market.

6. I know the current value of our home, the size of our mortgage, the interest rate on the mortgage, and how much equity we have on our home. I also know the length of our mortgage-payment schedule and how much it would cost per month to pay down the mortgage in half the time.

OR

I know how much rent we pay, when our lease expires, how much of a security deposit we gave the landlord, and what renewal rights we have.

7. I know what type of homeowner's or tenant's insurance we have and what the deductibles are. I know whether or not our policy would provide us with "today's replacement cost" or actual cash value, if our home and/or property were destroyed or stolen.

8. I know the nature and size of all of our investments (including cash, chequing accounts, savings accounts, money-market accounts, GICs, Treasury bills, savings bonds, mutual funds, annuities, stocks and bonds, real estate investments, and collectibles such as stamps, coins, artwork, etc.). I also know where all the relevant paperwork is kept.

9. I know the annualized returns of all the above-mentioned investments.

Excerpted from Smart Couples Finish Rich by David Bach. Copyright 2003 by David Bach. Excerpted by permission of Doubleday Canada, a division of Random House of Canada Limited. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.

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10. I know the current value of all of our retirement accounts (including RRSPs, RESPs, company pension plans, etc.). I know where the statements for these accounts are kept and I have a solid grasp of how all our accounts performed last year.

11. I know what percentage of our income we are saving as a couple.

12. I know how much each of us is putting into our respective retirement accounts, whether that amounts to the maximum allowable contribution, whether our employers are making matching contributions, and what our respective vesting schedules are.

13. I know how much money each of us will be getting from the Canada Pension Plan and Old Age Security when we retire, and what our pension benefits (if any) will be.

14. I know whether or not we have a will or living trust, what its provisions are, and how up-to-date it is.

15. I know whether our income would be protected by disability insurance should I or my partner become unable to work. If we do have disability insurance, I know the amount of the coverage, when the benefits would start, and whether they would be taxable. If we don't have disability insurance, I know why we don't have it.

16. I know what my partner's wishes are regarding medical treatment (including being kept alive by artificial means) in the event he or she falls seriously ill or is seriously injured. I know whether or not our will includes a valid power of attorney covering such situations. I also know how my partner feels about being an organ donor.

17. I know if my partner has taken an investment class in recent years.

18. I know how my partner's parents handled their finances and I know what effect that has had on how my partner feels about how we manage our money.

Excerpted from Smart Couples Finish Rich by David Bach. Copyright 2003 by David Bach. Excerpted by permission of Doubleday Canada, a division of Random House of Canada Limited. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.

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Scoring:
Give yourself one point for every time you answered "True," and zero for every time you answered "False."

14 to 18 points. Excellent! You and your partner obviously have been planning together, as a result of which you have a good grasp of the state of your finances and how you both feel about money.

9 to 13 points. The two of you are not totally in the dark, but there are some areas in which your knowledge is less than adequate.

Under 9 points. You and your partner don't make a habit of talking about money, do you? As a result, your chances of being hurt financially because of insufficient knowledge are enormous. You need to learn how to work together in order to protect yourselves from future financial disaster.

If you scored well on this test, congratulations! But don't go out and start celebrating just yet. Even among knowledgeable money managers, it's rare to find people who have a handle on every aspect of their own finances and what they could and should be doing to assure themselves secure futures. So even if you scored 12 or above, I guarantee you'll discover a few secrets and ideas that will be of enormous value to you.

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Excerpted from Smart Couples Finish Rich by David Bach. Copyright 2003 by David Bach. Excerpted by permission of Doubleday Canada, a division of Random House of Canada Limited. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.

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