8 Signs That You Are Financially Healthy
In considering whether you are physically healthy and in good shape, there are a number of measures that you can evaluate. You can look at your weight, or for a more accurate picture, your BMI. Numbers like your blood pressure or resting heart rate can give you good information. Blood work can provide insight into what is going on internally. Finally, you can evaluate your habits. Are you working out? Are you eating a balanced diet. But what about your financial health? What are the measurements and habits that demonstrate you are financially healthy? Here are 8 signs that indicate strong financial condition.
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You Have An Emergency Fund
Having an emergency fund might be one of the most important steps you can take to protect yourself financially. Savings equal to 3 to 6 months of expenses is considered an adequate emergency fund. This savings can be used in the event of a job loss, medical emergency, or unexpected expense and can prevent you from doing into debt.
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You Are Saving for Retirement
Just as important as saving for the unexpected is saving for the inevitable. You aren’t going to be able to work forever so it’s important to put money away for the years after retirement. It’s smart to start saving as soon as you can so that your retirement accounts can grow over time.
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Your Debts Are Strategic and Manageable
Savings are important, but debts are important too. Debts grow the same way savings do but to your detriment instead of your benefit. Those who are financially healthy will avoid going into debt as much as possible. Borrowing money is sometimes a wise choice to achieve overall personal or business goals, but any borrowing should be done only after careful consideration, and unsecure debt should be eliminated as soon as possible so they don’t grow out of control.
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Your Budget Category Percentages Are Reasonable
One benefit of creating a household budget is that you can see where your money is going. Financial experts often give recommendations of what percentage of your budget should be allocated to certain categories, and while these are not set it stone, following them can help you avoid becoming overextended. You can easily find recommendations on the web.
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Your Monthly Spending Is Less Than Monthly Income
It’s probably obvious that you should spend less than what you take in every month, but this principle is too often violated. Having month after month of overspending what you afford will send you quickly into debt. For your own financial health, don’t spend more than you earn.
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You Have Adequate Protections In Place
You never know when the unexpected will occur so it’s important to be protected. Having the right insurance can give you the peace of mind that comes with knowing that even if an accident, medical emergency, theft, or death were to occur, your financial stability would not be destroyed. Health insurance, home and property insurance, car insurance, and life insurance are important tools in protecting your finances in the face of misfortune.
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Your Credit Score is Good
Your credit score can also be an indicator of how financially healthy you are. A credit score represents how trustworthy you seem to theoretical creditors. Your credit score is based on your past performance in paying your bills and paying back loans. In general, scores between 690 and 719 are considered good and anything above 720 is rated as excellent.
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Your Financial Stress Levels Are Low
Finally, a completely subjective measure of financial health that you may consider is your financial stress level. When you feel confident in your savings and at peace with your spending, it means a lot. If you are constantly worrying about whether you will have enough money to pay your bills or having to delay the purchase of necessary items, you should probably take a look at your overall budget and short- and long-term goals. Making changes and getting healthier in the area of finances may reduce your stress level and actually help your physical health too.
Federated Bank is here to help in whatever ways we can. Whether you want to set up a savings account to get that emergency fund started, use CardValet to set spending limits for yourself, or make paying bills easier with Mobile or Online Bill Pay, remember that we have lots of tools to help you get and stay financially healthy.
