How to Tell if You’re Financially HealthyBy Mary C
It’s highly important for us to evaluate and be aware of our current financial health. Knowing our current status financially would help save us a lot of money and avoid unnecessary purchases.
Doing a financial wellness check from time to time would also mean that we avoid the risk of going bankrupt and be prepared for financial life challenges.
How to Check the Health of Your Financial Situation
The first step in determining if you are financially healthy is to be well-aware of your net worth. The right way to do this is to list down all of your assets such as your house and investments then deduct them from your current debt such as loans.
Your salary isn’t included as you are simply measuring the worth of what you currently have. Knowing your net worth would then provide you a basis of how much you need to do to increase it or avoid being in the negative.
The next step is figuring out where all of your money is going. It’s important that you get to follow a budget. What are the things you need? How much do you need to budget for debt or bills? Knowing where your money goes is a good way of setting up your budget.
There are a lot of other questions that you could ask yourself when determining your financial health such as: do you have emergency funds? Are you covered by insurance?
However, an important question to ask yourself is “What are my goals financially?”. Having a set goal for you or your family helps you determine which paths for you to take. Without a fixed goal, it will be hard for you to stay determined to ensuring financial wellness.