How to Measure Fiscal Responsibility: Calculate Your FS-FR Score
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Ever wondered how to gauge your financial prudence? It’s simple—calculate your FS-FR score. Initially, we introduced FS-DAIR, a smart tool that helps you decide when to invest or reduce debt when you have extra money. Building on that, I’m excited to introduce the Financial Samurai Fiscal Responsibility Score, or FS-FR. This score assesses how fiscally responsible you are in a straightforward and enjoyable manner.
Some of you might find the FS-FR score controversial, especially if it’s low, but that’s part of the fun. Financial concepts often seem tedious and complex, which leads people to ignore them. However, by simplifying these ideas into something like the FS-FR score, we might encourage more people to manage their finances better and avoid overspending on depreciating assets like cars.
Measuring Fiscal Responsibility With The FS-FR Score
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A car, for example, is almost certain to lose value over time, unlike a house, which generally appreciates, especially the longer you own it. This leads to a simple truth: to build wealth, you should aim to invest more in housing and less in vehicles.
The FS-FR score itself is quite straightforward to calculate. Simply divide the average price of a home in your country by the average price of a car. For example, in America, the median home price is about $380,000, and the average car costs around $40,000, which gives an average FS-FR score between 9 and 10. The higher the score, the better, as it indicates a smaller portion of your wealth is tied up in depreciating assets like cars.
But what if you don’t own a car and instead own a home? You score a 21, showing you’re making smarter financial choices like using public transport or working from home. On the flip side, if you own a car but no home, your fiscal responsibility is deemed lower, especially if you’re over the age of 35, given that the median age for first-time homebuyers is around 31.
Real-Life Examples of FS-FR Scores
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Let’s look at some real-life examples:
1. A Mechanical Engineer, aged 36, who rents and drives a used BMW, has a low FS-FR score under 5.
2. A Roofer, aged 52, owns a home worth $780,000 and several vehicles totaling $250,000, resulting in a score of 3.1.
3. A Software Engineer, aged 39, with a home valued at $720,000 and a car worth $25,000, scores a high 28.8.
4. An Entrepreneur, aged 37, owns a home worth $1,350,000 and drives a Toyota Yaris valued at $20,000, achieving an FS-FR score of 67.5.
5. A CEO of a publicly traded company, also 37, with a $10 million home and a Tesla worth $130,000, scores a 77.
6. A retiree, aged 69, with a home worth $1,000,000 and a 1997 Toyota Avalon valued at $3,000, boasts a score of 333.
The FS-FR score not only quantifies fiscal responsibility in a relatable way but also sparks discussions about personal finance management. Whether it’s deciding to buy less car and more house or weighing the pros and cons of owning property, this score provides a fun and easy method to see where you stand financially. What’s your FS-FR score?
