How to Gauge Your Financial Health
You probably get your car checked at the mechanic and your health checked at the doctor, but when was the last time you took a deep look into the health of your finances?
Just like with a car or your body, unexpected problems with your finances can pop up at any time. If they are overlooked or go unattended for too long, bigger problems can arise. It’s time to take control and take steps towards healthier finances.
Are you content?
It may seem odd to count your emotions in an audit of your financial health, but sometimes your gut is the best indicator. Are you often stressed over bills and frustrated with your financial situation? You probably already know your financial health is declining. If you’re always waiting on your next paycheck and unexpected expenses throw your budget way out of whack, it’s time to get a check-up and prescribe some big changes to help your budget match your lifestyle and your long-term goals.
Do you spend more than you earn?
Knowing how much you earn versus how much you spend is the first step to a strong budget. Since the uptick in card usage over cash, it has become much easier to simply swipe rather than track our spending. Take the time to explore the categories where you spend the most and make sure that you aren’t in the red. Use online tools to help identify any trends or areas of focus.
Are you prepared for the worst?
Life is full of unexpected expenses — are your finances in a place where you can deal with them with little to no stress? There are two parts to your emergency financial health: savings and insurance. Aim to save 20% of your annual after-tax income for emergency funds. Additionally, do a quick audit of your health, home and auto insurance policies and make sure they meet the needs you currently have. If they don’t, update them as soon as you are eligible to help avoid any steep expenses that may arise unexpectedly.
Is your net worth growing?
If you’re not sure of your net worth, subtract your debt from your assets (include any property you own, savings, etc.). Your net worth can increase in two ways: increasing your assets or decreasing your debt. Accomplishing either will help you increase your net worth.
THE CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND IS NOT INTENDED TO PROVIDE FINANCIAL ADVICE TO YOU AND YOU SHOULD NOT RELY UPON THE CONTENT TO PROVIDE ANY SUCH ADVICE. YOU SHOULD SEEK THE ADVICE OF PROFESSIONALS REGARDING THE EVALUATION AND VERIFICATION OF ANY CONTENT PROVIDED ON THE SITE AND, IN ANY EVENT, PRIOR TO MAKING ANY FINANCIAL DECISIONS BASED ON SUCH CONTENT.