Take the Pulse of Your Financial Health
| Posted in Bank Blogs
How to tell if you’re financially healthy
Your personal and mental health is extremely important. Right below those two, we’d have your financial health. It matters a lot. How do you know if you’re financially healthy? Here’s a checklist.
- Credit Score. The higher your credit score, the healthier you are. Shoot for at least 650. That indicates to lenders that you can handle debts and are creditworthy. The better your score, the better deals and rates you’ll get.
- Retirement Savings. Use a retirement calculator to make sure you are healthy in this category. Remember, even if you can’t save a lot, every little bit helps. You can’t depend on Social Security alone during retirement.
- Debt-to-Income Ratio. Almost everyone has some form of debt, from good (mortgage) to bad (credit cards). The thing to watch for your financial health is your debt-to-income ratio. This refers to the percentage of your monthly income that is spent on paying debts. All you have to do to find your ratio is divide your monthly debt payments by your gross monthly income. You want your ratio to be 35 percent or less.
- Short-Term Savings. If you want to be financially healthy, you must have a short-term savings and/or emergency fund. Ideally, you want to have saved enough to cover six months of fixed expenses.
Do One Thing: Use a retirement calculator to make sure you are on target (or as close as possible) to socking away plenty of cash for your golden years.
check out our retirement calculator here
Author: Chris O'Shea