Many banks in the United States underwent a recent 'stress test' to determine how they might respond to worst-case economic scenarios. You can also do your own personal stress test to help gauge your financial situation by considering four key questions.

Does more than 10 per cent of your monthly take-home pay go to debt payments (not including your mortgage) - credit cards, home equity loans and student loans?

If it does, that's high. Work to reduce it.

Now add your mortgage payment to that debt. Is the total more than 36 per cent of your take-home pay?

That's when the bells begin to go off. Your goal should be to pay down your debt.

If you lost your job, how many months would you be able to live off your savings?

It's a problem if you answer is, "Months? How about one week?" Your goal should be to build up an emergency fund that would cover at least three months' worth of expenses. Or more.

If your pay is cut by 10 per cent or if you were forced to go on unpaid leave for a short time, would you still be able to cover your monthly bills?

Living on less money than you make is key. If you save, you can survive the hard times. No matter what your income is, you should not be spending it all.

Reprinted from the South Florida Sun-Sentinel

Use these four questions for your personal finance stress test