How to Measure Your Financial Health
Review your current housing expenses., Calculate your monthly debt obligations., Ensure that you have an emergency fund set up when evaluating financial health., Evaluate your retirement savings and determine whether you are on track., Make sure...
Step-by-Step Guide
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Step 1: Review your current housing expenses.
This amount would include rent or mortgage payments.
In the latter regard, you should also include any homeowner's insurance and property taxes.
A healthy monthly payback amount in comparison to your gross income would be less that 28 percent.
Should your monthly payback amounts exceed this percentage, you should consider increasing your income or decreasing your monthly payments via refinancing. -
Step 2: Calculate your monthly debt obligations.
These would include your credit card payments, car loans, mortgage and any other loan obligations.
To confirm whether you are debt heavy, compare the amount with your income and make sure that your debt does not exceed 36 percent.
If you have any more than that, you should look into debt reduction options. , This account should be set aside in the event that you lose your job.
An emergency fund allows you to continue paying your monthly expenses until you acquire another job.
Ideally you should have 6 to 12 months of overheads covered by your emergency fund, including mortgage or rent, loan payments, utility bills, groceries, gas and any other expense you usually incur within a month. , Never assume that you are too young to set funds aside every month for when you retire.
Ideally, you should start saving as soon as you start working.
It's a good habit to get into.
If your company offers a retirement matching plan, then take advantage of it.
Put in the maximum that your company will match.
Acquire a basic understanding of investments, and learn the importance of diversification.
You don't want to put all your funds in just 1 venture.
Instead, you should spread your funds along a mixture of assets, such as real estate, cash, bonds, stock and gold.
Diversification is a great way of reducing your risk while growing your wealth. , You should have car insurance, homeowner's insurance, life insurance and anything else that will cover you in the event of a disaster.
Review all your policies and ensure that you are adequately covered at the best price. -
Step 3: Ensure that you have an emergency fund set up when evaluating financial health.
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Step 4: Evaluate your retirement savings and determine whether you are on track.
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Step 5: Make sure that you keep your insurance policies current.
Detailed Guide
This amount would include rent or mortgage payments.
In the latter regard, you should also include any homeowner's insurance and property taxes.
A healthy monthly payback amount in comparison to your gross income would be less that 28 percent.
Should your monthly payback amounts exceed this percentage, you should consider increasing your income or decreasing your monthly payments via refinancing.
These would include your credit card payments, car loans, mortgage and any other loan obligations.
To confirm whether you are debt heavy, compare the amount with your income and make sure that your debt does not exceed 36 percent.
If you have any more than that, you should look into debt reduction options. , This account should be set aside in the event that you lose your job.
An emergency fund allows you to continue paying your monthly expenses until you acquire another job.
Ideally you should have 6 to 12 months of overheads covered by your emergency fund, including mortgage or rent, loan payments, utility bills, groceries, gas and any other expense you usually incur within a month. , Never assume that you are too young to set funds aside every month for when you retire.
Ideally, you should start saving as soon as you start working.
It's a good habit to get into.
If your company offers a retirement matching plan, then take advantage of it.
Put in the maximum that your company will match.
Acquire a basic understanding of investments, and learn the importance of diversification.
You don't want to put all your funds in just 1 venture.
Instead, you should spread your funds along a mixture of assets, such as real estate, cash, bonds, stock and gold.
Diversification is a great way of reducing your risk while growing your wealth. , You should have car insurance, homeowner's insurance, life insurance and anything else that will cover you in the event of a disaster.
Review all your policies and ensure that you are adequately covered at the best price.
About the Author
Jennifer Sanchez
A passionate writer with expertise in cooking topics. Loves sharing practical knowledge.
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