How to Measure Your Financial Health?

Finance is one of the most important things in our lives, indeed money may not be everything but money is one of the important things because without money we might not be able to live. One of the important things you have to do with your money is to maintain the health of your money so that the money you make can be used properly and wisely. Because financial health determines how successful you are with the money you make. There are many factors that you must pay attention to measuring your money’s worth, you must also be able to analyze your assets and debt. If you want to calculate how healthy your money is, consider the steps below :

1. Calculate your monthly debt obligations

Why do you have to calculate your financial health? Maybe some people, including you, might think that managing your finances is a difficult thing to do, so you can be lazy to calculate your finances so that your financial system is not neatly organized. Though regulating the financial system is one of the most important things, especially to calculate the health of your money. For those of you who want to start calculating the health of your money each month, you must consider many factors. One factor that you should pay attention is calculating your monthly debt obligations. Maybe some of us routinely calculate their monthly obligations, there are also those who don’t and just feel panic when it’s nearing the due date. From now on you must be able to calculate your debt obligations properly so that you can find out your financial health.

You must calculate all your monthly debt obligations, starting from the cost of your credit card payments, your car or motorcycle loans, mortgages, and other obligations. Most people don’t plan their finances well, they have debt every month but they may not put up reminders so that when they are nearing the due date they will panic. Therefore, to find out if your financial health is fine, the first thing you have to do is to calculate your monthly debt obligations.

To confirm whether your debt is large or not, then add up all your monthly debts then compare your debt with your total income each month. If your debt does not exceed 36%, your debt is still normal and does not exceed the limit. But if the percentage of your debt exceeds 36% then you can say that your debt is a lot. If you exceed this, all you have to do is make a debt reduction option. If you are confused about how to reduce debt, try asking for help from a financial planner or financial consultant.

2. Make sure that you have an emergency fund

Maybe a lot of people don’t care about their finances and don’t pay attention to the health of their money. Even though having good financial health is one form of success in finance. Therefore, from now on we recommend that you start paying attention and maintaining your financial health so that you can get healthy finances and be able to use your money wisely. In addition to routinely calculating the billing obligations that you have to pay each month, if you want to know the health of your finances, then the way you should do is to make sure that you really have an emergency fund. What is an emergency fund and is an emergency fund one of the important things that you must have?

When you decide to commit to checking your financial health, the thing you have to do is make sure that you had prepared an emergency fund. It is possible that when you are faced with problems such as going out of your job, then your emergency fund will help you. Maybe when you decide to get out of your job, there are still a number of monthly bills that you have to pay for it, such as car installment bills, rental payments, and others. When you lose your job and are waiting for a next job call, then maybe you don’t have income and to pay for it you can use an emergency fund. Therefore, why emergency funds are very important for you to prepare from now on.

For your financial health to be well maintained, you must prepare an emergency fund from now on. Ideally, you should have a 6 to 12-month fee covered by your emergency fund. What should the emergency costs cover? The costs of entering or being covered by your emergency costs are the cost of a mortgage or rent, electricity bills, payment of loan fees, groceries, and other expenses that you routinely spend in a month. So, from now don’t ignore the emergency fees!

3. Check your retirement savings and check that you are on the right track

Savings or pension funds are one of the most important funds, especially for those of you who want to maintain your financial health. Maybe, you who are still young and still working, don’t think of pension funds because you think your retirement is still long. If you think like that then start now throwing away that thought, if you want to maintain your financial health you must prepare for your retirement savings. Even though you may be young and you earn a lot, you have to prepare it from now on and you should not ignore pension funds because it is one of the important funds that you have to prepare if you want to maintain your financial health.

Ideally, from this time you should immediately save your money if you already work and earn income independently. Maybe initially it’s a bit difficult because you have to save some of your money. But if you do that every time you get a salary then it will be a good habit to prepare your pension funds. There are several companies that will usually offer retirement matching plans for their employees. If your company offers pension matching for you, we recommend that you use it well. Enter the funds that match the maximum according to your company’s offer.

In addition to deviating from your funds or retirement savings, we also recommend that from now on you learn and know about the basic investment, besides that you also need to know the importance of diversification. In addition, so that your savings grow to a lot, we recommend that you place your funds not only on 1 business. You have to spread your money on several types of assets such as real estate, bonds, stocks, and gold. Maybe there are some people who don’t know it yet, but diversification is a good way to reduce risk when your wealth increases. So, from now on, pay attention to your retirement savings, start investing and diversify so that you can make your financial health better

4. Make sure that you monitor insurance

What is an insurance? Maybe insurance is no longer foreign to you, even though you don’t take any insurance but at least you’ve heard this word. Insurance is one form of agreement whereby an insurer will declare himself to someone who is insured by accepting a thing called a premium to give him compensation for damage, a loss that might be suffered at a time. One form of monitoring your financial health is to take part in insurance. Make sure your monitor keeps your insurance current.

You must have several types of insurance so that your financial health can be maintained properly. We suggest that you have car insurance, homeowner insurance, then life insurance, and other insurance that will protect yourself and your family in the event of a disaster. This is also one of the ways you have to do so you can monitor your financial health well. Lead all the policies in the insurance and you must turn off that you get adequate protection at the best price and according to your monthly or annual budget. Have you taken insurance? If you have not followed and may still be confused about which insurance you can consult with your financial planner.

5. Review the cost of your current residence

The fifth thing you can do to maintain your financial health is to review the cost of your current residence or housing. The amount we mean here is included with rent or mortgage payments. In addition, to be able to calculate your financial health, you must enter insurance and homeowner’s taxes so that you can calculate the total cost. Maybe not many know this, but a healthy monthly return, compared to your gross income, will be less than 28%. If you have calculated it and the amount of the refund has exceeded 28% then you should reconsider to increase your income each month or maybe overcome it by reducing monthly payments through refinancing. Make sure you pay attention to these points so that you can get your financial health as you want.

6. Make sure your investment strategy is correct

There are so many ways you have to do, so you can monitor your financial health well. In addition to the 5 ways above, the thing you need to do is to ensure your investment strategy is right. But is this investment a very important thing in managing your financial health? Before you make sure the investment strategy you choose is right, the thing you have to do is to prepare emergency money first as we discussed above. Only after you have a savings or emergency fund can you arrange your investment. Make sure that the strategy that you do in the investment you want fits your situation so that you can manage your financial health well.

One of the things that can be considered for those of you who want to maintain the health of your money well is to make a dollar investment. But before you make a dollar investment there are some things that you should pay attention to, namely several factors. Here are some of the factors that you must pay attention to before investing in dollars:

– Risk tolerance that might occur to you

The first factor that you should pay attention to is the risk tolerance that might happen to you. If you are young and already working, then your time to retire is of course still long. Because your retirement time is still long, we suggest that you invest 100 percent of the shares in your investment. But if you think more about the risks, we suggest you not to rush into planting stocks and adjust to your conditions.

– Choose an investment that suits your conditions and according to what you want

Do you want to invest in a company that offers high returns or do you want to invest in an established company that might already be trusted? It’s all in your hands.

That was some information that we can give about how to maintain your financial health. Hopefully, the article we provide this time can be useful and also help you.