5 Signs You’re In Excellent Financial Health
While most financial advice focuses on managing a tight budget, investing wisely, and accumulating savings, there are those of you who are in great fiscal shape and have been for a while now.
How do you know if you’re ahead of the game money-wise though? While this is by no means a comprehensive list, you can use the following signs as benchmarks to gauge the extent of your financial health.
Financial Health Tip No. 1.
You have little or no debt
Whether you appreciate frugal living, or you earn a large enough income to pay off your creditors, the chances are you’re in a healthy financial situation. Debt can greatly cut into your monthly budget, reducing the amount you have to invest in assets that will yield regular returns. Therefore, the less debt you have, the better off you are.
Financial Wellness Tip No. 2
You have your annual income in savings
If you’re between the ages of 30 and 40, and you’ve managed to accumulate your yearly salary or more in savings, you’re on the right track to increasing your net wealth. At this stage, you’re likely limiting consumer debt, you have excellent saving habits, and you’ve bought several large assets including property and a vehicle.
Financial Health Tip No. 3.
Your financial portfolio can withstand a loss
A large and diversified portfolio can protect you when the markets turn bad. If yours can withstand an economic hit or two without ruining your plans for retirement, then you know you’re in a financially secure position.
Financial Wellness Tip No. 4.
You have sufficient insurance
Whether you have medical aid, life coverage, home and car insurance, or policies in place for the education of your children, you’re a step ahead of most people.
Financial Health Tip No. 5.
In a dual-income household, you can cover monthly expenses with one salary
If you’re a married couple who can cover fixed monthly expenses with one income, and use the second income for savings or luxury purchases, then you’re in excellent condition.
Keep in mind that your standard of living may be different to others. Therefore, you should think about your current position, as well as your intentions for retirement when you evaluate your net wealth.
How do you measure your financial health? Perhaps you’d add a benchmark or two to our list. Share your thoughts in the comment section below.