6 Indicators To Keep Your Financial Health In Check
Personal finances can either make or break you. No matter how much money you're making at this point, having an awareness of where you stand financially is essential.
A high salary means little if you're spending every penny. Such poor spending habits typically start from harmless small expenses that eventually turn into uncontrollable overspending issues.
Check Your Credit Score
One of the essential indicators of your financial health is your credit score. It is a three-digit number that determines your progress towards monetary goals. Your credit score will be typically lower if you default on credit payments, mortgage costs, premiums on loans, and others. A low credit score may indicate that your financial condition is unhealthy.
Evaluate Your Net Worth
Your net worth is a good indicator of your financial health as it provides a snapshot of your current financial situation. Essentially, your net worth is the total amount of all your assets less than your liabilities.
Determine Your Savings Rate
Your savings rate is the portion of your income that you save every month. It can be allocated for an investment and emergency, a major purchase, or other financial goals you want to achieve. The ideal rate for savings is at least 20% of your income.
Identify Your Debt-To-Income (DTI) Ratio
Another way to check your financial health is to identify your debt-to-income ratio. Typically, it's the percentage of your income that goes towards paying your monthly debts. You can calculate it by counting up all your monthly debt repayments and divide them by your gross income.
SWIPE UP TO KNOW MORE
Discover more from yourmoneygeek.com