Do you know what your financial IQ is? Sometimes called an FIQ, the figure is a subjective measure of how comfortable you are with all things finance-related, particularly as they apply to your personal situation. People pay plenty of attention to their intelligence quotient, or IQ, as well as their emotional savvy, EQ, that they seldom stop to think about their financial IQ.

What makes for a high quotient? You’re well on your way to having a respectable financial IQ if you engage in long-term budgeting and planning, know how to consolidate debt, have a well-funded emergency account in place, understand the importance of prioritizing all the monthly bills, and have a solid, realistic grip on what you can and can’t afford. It’s all about knowing how to live within your means, remaining solvent from year to year, and setting something aside for the future. Here’s a review of each of the main components.

Make Long-Term Goals

It’s amazing how many people who are sticklers about making budgets have no view of the long-term picture. They know exactly what comes in and goes out on a current basis but have nothing put aside for retirement, don’t know when they’ll be able to afford a vacation, and generally, ignore the extended view of their finances. Taking time to commit your long-term monetary goals to writing is the ideal way to begin. Decide, for example, when you plan to retire, how much you want to have when you do, and when you want to purchase a first or second home.

Consolidate Loans

The most common kinds of debt consolidations relate to credit card and education debt. For working adults who have multiple student loans, for instance, consolidating into a single monthly payment can be an effective and fast way to do accomplish several key goals. That’s because student loan consolidations not only give you access to better terms and rates but help you bring monthly payments down. Consolidating is a smart way to simplify your entire financial picture and set things right.

Build an Emergency Fund

Call it an emergency, rainy day, or job-changing fund, this set-aside is a specific sum of cash that acts to help you get through tough times. In many cases, people put somewhere between three-months and six-months salary into the account and don’t touch it unless a real emergency arises. To keep yourself on track, it’s wise to put in writing the exact circumstances that will allow you to dip into the account. Common reasons include natural disasters that force you out of your house, job losses, unexpected medical bills, and more.

Prioritize All Your Bills

Prioritizing is the most important skill used in budgeting. It’s one thing to list all your recurring expenses and their exact or estimated amounts. However, it’s quite another to tag each one with a specific date. Going through this exercise is a great way to get control of things like grocery spending, eating out, and entertainment costs. Activities like those can be assigned specific dates and amounts in a budget, which makes you less apt to overspend.