Work out your Moneystepper Personal Finance Score (MPF) today

The Moneystepper Personal Finance Score

Before I start, I want to say that this idea is stolen. I first saw it at Save Spend Splurge, but it was originally devised over at jly224.

They came up with the idea of assigning yourself a “Personal Finance (PF) score”. It is a brilliant idea and something that the personal finance world has been lacking. Their formula is simple:

Personal Finance Score

The simplicity of this is great. However, being a geek, I craved something more!


The strengths

This calculation gives you a very simple overview of your position. It breaks your score down into the following:

Personal Finance Score 2

The traditional understanding of your financial position is net wealth. However, the balance sheet (net wealth) is clearly not enough. One person has $1m, but spends $1m per year. Another person has $500k, with annual expenses of $20k. Although the second person’s net wealth is not as much today, clearly their lifestyle means that they are in a better position in the long-term. This formula overcomes this problem.

The calculation doesn’t take into account income. When analyzing investments, you should look at the present value of the future cashflows. However, I like that the personal finance score doesn’t do this. For most people, maximizing future income streams through work isn’t their objective, and hence including your annual salary would not be beneficial to show your “financial position”.

The weaknesses

There are three main problems I see with this calculation:

1)      It doesn’t work with negative net wealth. If you have net wealth of -$100k and expenses of $10k, your score is -10. If your net wealth was still -$100k and your expenses were now doubled at $20k, your score would be -5, which would suggest you are in a better position, which isn’t true.

2)      It ignores passive cash inflows. Whilst I believe it is a good idea to ignore your main source of income, your net wealth is clearly affected by your passive income streams. Say one person has $100k cash as part of their net wealth, and is earning 0.5% cash interest. Another person has $100k, but it is invested in a long-term bond paying 3% interest. Clearly, the second person is in a better position.

3)      It ignores age. To make it comparable, the Personal Finance score should take into account the age of the person. The average 20 year old is going to have a lower net wealth than the average 50 year old. However, it would be good if their scores could be comparable.


A revised personal finance score

Ladies and gentlemen, let me introduce the “Moneystepper Personal Finance (MPF) Score”:

It is calculated in the following way:

Personal Finance Score 3

This works on the assumption that your annual expenses exceed your annual passive income. If your annual passive income exceeds your total annual expenses, then congratulations, you have completed the Moneystepper Personal Finance Score!!

Also, this formula is still only useful for those people with a positive net wealth (as it has the same limitation as the original).


An alternative formula for people with negative net wealth

However, if you are in debt, you are probably more in need to a Personal Finance score to keep you motivated going forward. Fear not, moneystepper is here for you!!

Personal Finance Score 4

Although a little ugly in the formula, the age multiple keeps the outcome in the same proportion as the positive net wealth.



I intend to make this standard for all moneystepper readers. Therefore, if you could please ask any questions you have in the comments below, I would be very grateful:

microsoft studio 1) Should I include my mortgage? Yes. You should include all your assets and liabilities, including your home mortgage. Your home property should be valued prudently (at the lower of cost price or latest actual valuation).

microsoft studio 2) Your question here…


Work out your score

I would really, REALLY, love to hear what score you get.

If you could let me know your age, score and whether it was calculated using positive or negative net wealth, either in the comments below or via email at, I can work out an average to give you a benchmark of how well you are doing against your peers…

4 thoughts on “Work out your Moneystepper Personal Finance Score (MPF) today

  1. Thanks for the mention!

    As I already pointed out in my reply to your comment, it does work with a negative net worth.

    “You are in a better position with a net worth that is -$50,000 rather than -$100,000 however.

    You’re basically $50,000 “richer”, or less in debt.

    And if your net worth was -$50k and your expenses were $20k, your number would be -2.5 which is far better than -5.

    The math works fine to me….”
    saverspender recently posted…10 reasons why sleeping on a minimalist futon is the best bed you will ever haveMy Profile

    • Thanks for the comment. I replied to your comment of SSS to further explain why it doesn’t work. Yes, it works well if you are in debt and you improve your net wealth, and this is obviously a good thing. However, it doesn’t work on the expenses side. As highlighted in the example:

      “If you have net wealth of -$100k and expenses of $10k, your score is -10. If your net wealth was still -$100k and your expenses were now doubled at $20k, your score would be -5, which would suggest you are in a better position, which isn’t true.”

      The fact that increasing your expenses (or in the MPF reducing your passive income) would lead to an improvement in your PF score is not only misleading, but its pretty dangerous and makes the PF score lose a lot of its value. The PF score, in my opinion, is most required for those people who are in debt, but whose expenses are too high.

      You may argue that this is obvious and that you should know that increasing your expenses when in debt is a bad thing. Yes, clearly this is the case. But, its also clearly the case that (if you are not in debt), increasing your net wealth and reducing your expenses is a good thing.

      The PF score is instead designed to provide you a comparative score (against your prior self and against your peers). Therefore, I personally believe that it is integral that the PF score provide someone in debt a better score when they reduce their expenses.

  2. I really like this concept, and I too tend to try to think about numbers and ratios as a relationship to others, and try to find new ways to analyze things.

    As an example; I made up Future Daily Dividend Income (FDDI), which is the amount of dividends I receive at a constant rate given a set fictitious 31 day month.

    I also convert quarterly dividends, and would also change any annual or semi-annual that apply(if I had any) to a monthly payout.
    Dividend Gamer recently posted…Why do we invest? Coca-Cola knows.My Profile

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