Physical health is probably the first thing that comes to mind when you hear the word health. This is most likely followed by mental and emotional health. Your financial well-being is an equally important part of wellness. While it’s something that doesn’t require a doctor’s visit, financial health still has a significant impact on your life.
An individual’s financial health is a measure of their current financial situation, including their credit, debt, savings, and investments. Financial health is a concept whose implications are widespread. For example, your physical and mental health may be adversely affected by poor financial health.
In this guide, we’ll further define financial health, how to assess your financial health, and how you can improve your financial health score.
This eight-question quiz leverages the Financial Health Toolkit to look at the ways you spend, save, borrow and plan your finances. It takes just a few minutes to complete, and helps you understand your next steps to building financial resilience.
Financial health is simply the ability to meet your financial obligations. Additionally, it describes how prepared you are to cover any unforeseen financial events.
If, for instance, you lose your income or incur an unexpected expense. Can you cover your financial needs? A person with good financial health does not have to worry about their money on a daily basis. What’s more, they are financially resilient.
“In our view, financial health at a minimum should address the ability of individuals and families to meet their current obligations and needs, absorb and recover from financial shocks, secure their future, and improve their financial situation over time,” write Jennifer Tescher and David Silberman for Brookings. “Importantly, while income is an important driver of financial health, income is surely not the only driver.”
“Rather, financial health has both a present and future orientation and considers the totality of people’s financial lives: not only whether they are able to meet current needs but also whether they are spending, saving, borrowing, and planning in ways that will enable them to be resilient and thrive,” they add. “Treating household income as a measure of the financial health of a family is thus no more valid than treating gross revenue as a measure of corporate health or gross tax receipts as a measure of a state’s fiscal health.”
Low credit scores and low savings are both signs of poor financial health, which can have a negative effect on your physical and mental health. These indicators are a danger to you and your dependents.
In fact, a Capital One CreditWise survey found that 73% of Americans rank financial stress as their top life stressor. Moreover, following the COVID-19 pandemic and rising inflation, an astounding 64% of Americans are living paycheck-to-paycheck.
According to financial expert and author Emily Guy Birken, every individual needs to view their own financial circumstances in a unique way.
“Financial health has a lot of parallels with physical health, in that there is no one single metric that determines health,” she told The Balance. “You may not be living paycheck to paycheck, but what are your debts? Do you have insurance? How big is your emergency fund? It can feel like a moving target because there’s not one metric to hit.”
“If you work on one, it will surely benefit your overall health,” stated Guy Birkin. “If you quit smoking, you may gain weight, but it improves your overall health. If you pay off high-interest debt, your cash flow might decrease for a while, but your overall financial health improves.”
Several key metrics that are used to assess a consumer’s financial health were referred to by Guy Birken as vital signs.
One such metric is income. While it’s not necessary to have a high income, one should have fewer expenses than one earns. A high level of debt may be a warning sign as well. An extremely high DTI ratio may indicate poor financial health, while a low ratio indicates good financial health.
By learning the metrics used by the industry to measure good financial health, you can improve your financial situation and maintain it.
There are several ways to evaluate your current financial health and determine what improvements can be made. But, again, one of the most useful is comparing your assets and debts. To determine this, consider categorizing the information as follows:
No one metric can show your financial health, even if you use the metrics listed above. For a more comprehensive assessment, though, the Center for Financial Services Innovation (CFSI) has identified eight indicators to know how to analyze your financial health.
In a nutshell, this indicator assesses if you have positive or negative cash flow. For those unaware, monthly cash flow shows how much money comes in and how much is spent in a household.
Let’s say that your family earns $7,000 monthly, and your monthly spending is $7,300. Clearly, this represents a negative cash flow for your family. In other words, you spend more than you earn each month. That suggests you may be going further into debt or consuming your savings every month.
You may also be able to have a positive cash flow if you are able to make more money, spend less, or both. For example, suppose you get a promotion at work as the primary breadwinner. This results in a household income of $7,500 per month.
Even better, some of your expenses were cut down to $6,900 per month. As a result, your household has a positive cash flow of $600 each month.
Because it gives you more flexibility, it’s a good indicator of financial health. Those extra dollars can be saved, used to pay off debt, or kept in an emergency fund.
A bill can be classified as either high priority or low priority. Typically, high-priority bills are more rigid and have more severe penalties for late payments, such as mortgage payments. On the other hand, low-priority bills are more flexible and forgiving.
Individuals’ ability to manage their cash flow and day-to-day financial commitments are primarily determined by their ability to keep up with their bill payments, both high and low priority.
Often, lenders, creditors, and companies give you a grace period (a few days) after the due date when you don’t have to pay late fees or interest. Every creditor has different definitions of ‘late’ payments. But it’s considered ‘late’ when it has been 30 days since the due date, and no payment has been made.
A collection agency can now be contacted, and the credit bureaus can receive a report if you miss a payment. However, before that happens, you may want to speak to your creditor if you can’t make a payment by the due date. Explain your financial situation and see if there is any possibility of moving the due date or making partial payments. You may be surprised that they will work with you since it’s in both parties interest.
With liquid savings, you can access the money whenever you want. That means they are not locked away in accounts like CDs or IRAs. Instead, your money is more accessible, like in a savings account. Overall, there are several types of liquid savings. And ultimately, what matters most is that you have adequate living expenses in liquid savings whenever you need it.
Savings are essential for several reasons;
Financially speaking, having the short and medium-term covered is beneficial. But achieving financial security and taking advantage of opportunities such as purchasing a home, investing in a child’s education, or retiring in a comfortable position require long-term savings.
Consider the replacement rate when making retirement plans to ensure you have the greatest purchasing power at retirement.
How much debt is too much?
“The most common rule of thumb to determine how much you can afford to spend on housing is that it should be no more than 30% of your gross monthly income, which is your total income before taxes or other deductions are taken out,” states Megan Leonhardt, senior money writer with CNBC Make It.
In the case of renters, she adds that 30% includes rent and utilities, such as heat, water, and electricity. When you own your home, you should also include interest, homeowners insurance, property taxes, and utilities, as well as your mortgage.
“That means if you earn $75,000 a year before taxes, you should spend no more than $1,875 a month on your housing.”
The 30% rule dictates how much a family can reasonably spend on housing, says Leonhardt. But, there’s still having enough left over for daily expenses such as food and transportation.
“If you’re looking to buy a home, some financial experts also recommend using the 28/36 rule to determine what you can afford,” she adds. If you want to buy a home within your budget, you must adhere to the 28/36 rule. In other words, your housing expenses, like mortgage payments, taxes, and insurance payments, shouldn’t surpass 28% of your gross monthly income. Likewise, the total amount of your debt, including credit cards, student loans, and car loan payments, shouldn’t exceed 36% of your gross monthly income.
“If you’re married or have a partner, keep in mind that this calculation includes the entire household, so you’ll need to include their salary and debts in the equation as well,” Leonhardt explains.
Most borrowers, and loans in general, tend to fall into either the prime or subprime category. A prime borrower is more likely to qualify for the best loan type, rate, and terms. The Consumer Financial Protection Bureau (CFPB) indicates prime credit ranges between 660 and 719. However, the numbers can vary a little depending on the lender.
The reason? Lenders value your ability to pay your monthly loan and credit card bills on time. As a result, you’re not likely to default on payments. For the lucky few, you may even be considered ‘super’ prime’ and have a high credit score from the 700s up to 850.
Compared with prime borrowers, subprime borrowers tend to carry higher balances and miss payments more often. Consequently, subprime borrowers usually receive unfavorable terms on loans, credit cards, and other financial products, which can lead to high costs in the long run. This makes it harder for these borrowers to improve their credit scores and reduce debt.
Even though there is no one-size-fits-all answer to what credit scores are considered subprime, Experian offers the following classification; FICO Scores between 580 and 669 are considered subprime.
Several factors influence credit scores and can be improved within six to twelve months. To keep it in the prime range or improve it, it’s worth learning more about it.
The definition of “appropriate insurance” varies from person to person. For instance, if you aren’t a homeowner, you don’t need this type of insurance. But, if you own a vehicle, then auto insurance is mandatory.
Following is a list of some of the most important types of insurance you should consider;
Insuring yourself ensures that you are prepared for the unexpected. What’s more, it can protect you financially, such as draining your emergency savings for a medical emergency, while also giving you peace of mind.
This indicator aims to assess whether people have a financial future in mind. You’re going to have a hard time looking forward financially to the next year or ten years from now if you are scrimping over your last $20 until you get paid next.
Ultimately, this measurement indicates the capability to plan ahead.
Over time, financial health results when an individual’s daily financial systems can help them capitalize on opportunities. Of course, financial health depends on an individual’s behavior and attitude. However, financial institutions also play a vital role in a person’s financial health. How? By offering high-quality products and services that promote saving responsibly, borrowing responsibly, and spending wisely.
With that in mind, a financial health score has been developed to assist financial institutions, advisors, and individuals themselves to understand the condition of their financial health better.
Essentially, a financial health score is a multi-digit score indicating a person’s financial health, similar to a credit score. However, in contrast to a credit score, this could also include additional information about an individual’s financial life, such as how they save and spend their money.
This score would also be forward-looking instead of backward-looking, which is another key difference it has with a credit score. To calculate a financial health score, rather than evaluating a customer based on past repayment habits, it would be assessed on whether that individual can be resilient and grasp opportunities as they unfold.
In no way should this score be used for lending decisions. Or for any other risk assessments, for that matter. A financial score is a snapshot of an individual’s financial situation. Knowing this information can guide them in improving their overall financial health.
If you want to discover your financial score, you’ll need to answer the following eight questions using a sliding scale. These will align with the indicators that were previously discussed.
In the last 12 months, which statement best describes the difference between your household’s expenditures and income? Spending was;
In the last year, how did your family pay its bills? In my home, we are able to pay;
With your household’s current level of spending, how long could you pay your bills without borrowing or withdrawing money from your retirement account?
If you wanted to save for a vacation, start a business, buy a home, save for college or retirement, or have a retirement fund last longer, how confident are you that your household is doing what’s needed?
If you have a mortgage, a bank loan, a student loan, money owed to people, medical debt, past-due bills, and credit card balances carried monthly, which statement describes how manageable your total debt is?
What is your credit score? Lenders use credit scores to judge your riskiness or safety as a borrower.
Consider the insurance you and your family members have, including your health insurance, car insurance, home or rental insurance, and life insurance. In the event of an emergency, how much confidence do you have in those policies?
What is your opinion of the statement: “My household finances ahead”?
Most people require time and effort to achieve financial health. Often, many of us neglect our financial health until there’s a crisis. As an example, you’re unemployed or earn low wages. Or you may have a good-paying job without a retirement plan or want to save for your children’s college fund.
Using the financial well-being assessment above, you can find out where you stand financially. Below are sections that offer helpful recommendations to help improve your financial health. Try the one based closest to your Score and move on to the next as your financial health gains strength.
“Financial ruin could be defined as a state or condition where one has a scarcity of money, has suffered large losses of income, where investment value and assets are over-leveraged, where there is burdensome debt, where there are no apparent immediate solutions, and seemingly all hope is lost that one’s current financial condition could possibly be rehabilitated,” explains financial advisor Eric Miller for Econologics Financial Advisors.
Millions of Americans face financial ruin due to no or little income and costly expenses like medical bills in the wake of the pandemic.
“Of course, most of us do not intend to be in financial ruin,” he adds. There is, however, a definite sequence of actions that have led one to this destructive path. There is a silver lining when we identify what has led to the ruin and find solutions.
Here’s the formula that Miller has developed for “ruin;.”
“Confusion is simply a symptom of not having a plan and not keeping correct statistics,” Miller states. “As applied to finances, the key is knowing exactly what the Optimum Financial Condition is and then aligning all your efforts and keeping in your discipline to achieve it.”
Often, financial confusion manifests in destructive actions that lead to financial ruin. Examples include;
How can you get out of confusion and begin restoring your financial health? Miller suggests;
Miller’s advice is a great starting point. But, his last suggestion is a little vague. You can also use the following five-step plan to help you climb out of financial ruin.
Evaluate what level of financial recovery you need to accomplish by asking;
This is also the perfect time to examine your overall financial picture, including income and expenses. It will be easier to take concrete steps toward recovery once we crunch the numbers and put it all on paper.
For any significant loss or disaster, shock and denial are valid stages of grief. At the same time, acceptance of the new reality is a critical step toward recovery. Your best option is to de-stress with your favorite low-cost hobby, talk to a close friend or partner, express your feelings in an online journal or pen-and-paper version, or vent to a close friend.
You will be drained of energy if you constantly look back and dwell on what could have been.
Decide what your primary objectives are before you begin the recovery process. For example, do you want to replenish depleted emergency reserves? How can you return to earning the same amount of income you had before? Can you pay down your medical bills?
Whatever they are, you will be more successful if you outline your goals beforehand.
While working through this step, keep in mind to pick SMART goals;
After determining your goal, you’re ready to create a comprehensive plan. Following a series of steps that lead to complete financial wellness is what your plan should entail.
In your plan, you may want to include these steps:
Let’s not sugarcoat this. Getting out of financial ruin is extremely difficult. Thankfully, when you’re in financial trouble, you don’t have to do it by yourself.
For example, even if you go the DIY route, there are free blogs, podcasts, YouTube videos, and budgeting tools to assist you. What’s more, you could turn to family or friends. Perhaps you could borrow money from them and pay them back when you’re back on your feet.
Additionally, you could obtain free credit counseling advice from credit unions or non-profits. And, when you’re in financial ruin, don’t hesitate to seek help from government programs like the TANF Program or charities like the National Assistance League.
Using an overly simplified example, a financially ill person might live beyond their means, be behind on their bills, and not have any savings.
Research has shown that financial worries and mental health problems are linked in a cyclical fashion, according to HelpGuide. Anxiety, depression, and substance abuse are often associated with financial concerns. According to the Money and Mental Health Policy Institute, poor finances can lead to stress and anxiety, further impacting finances.
This can also impact your physical health. Headaches, heart disease, digestive problems, and weight gain can all develop due to financial stress.
While your financial health isn’t as dire as being in financial ruin, being financially ill isn’t much better. The guidelines above can be helpful, but according to a report from Personal Capital, Americans don’t believe there is a single state of financial well-being. According to 72% of respondents, financial health is a journey rather than a specific goal.
The following tips will help you manage your money without feeling stressed, regardless of how much you make.
Your financial stress may stem from the fact that you haven’t developed a budget. But, remember that if you’re grumbling inwardly about the prospect of creating one.
Analyze your weekly expenses to uncover where you’re spending extra money. You’ll also need to figure out how much of your income flows out of your budget. Get a budget app to keep track of how much you spend and where you spend it. If you plan your budget well, you may be able to find extra funds to pay down your debt.
It might seem impossible to start an emergency fund when you already have financial difficulties. However, putting $1,000 in a low-risk money market account like a money market fund doesn’t take much. Within a short period of time, you’ll have $1,000 if you consistently put $100 into a savings account.
It’s important to make saving money automatic so that you don’t have to decide to do so consciously. While experts suggest having six months’ worth of expenses saved, start small. For instance, aim for $100 and keep working your way up.
Personal Capital’s report indicates that Americans believe achieving financial well-being is difficult. 60% of respondents said they felt confident in their ability to achieve financial stability. Today, however, only 48% are financially healthy.
Think about what makes you feel most capable financially. Saving beyond paying bills? Ensuring your child has enough money for college?
You may also wish to consider spending your money in an unnecessary way. For example, are you spending too much on your car? Do you own a boat or ATV? Are you overspending?
Address your issues at their core so you can deal with them effectively.
Personal Capital says 76% of Americans believe receiving financial advice gives them a stronger sense of confidence in becoming financially literate. Would you agree that financial services companies should make achieving financial wellness more accessible and easier to understand, as 69% of Americans do?
You can create an investment and savings strategy with the help of a financial advisor. Having a financial plan for the long term will really make you feel good.
If you can’t afford the way you live, you may be deeply in debt. Unfortunately, that situation is common among high earners. Get help reorganizing your debt and negotiating with creditors from a credit counseling service.
Don’t be afraid to seek help. Nearly everyone needs assistance on the road to financial success at some point.
A financially vulnerable person cannot save for retirement, has difficulty paying their bills, and has a hard time keeping up with their bills. When you are in this situation, you may not be able to take advantage of low-interest loans or credit cards when you get an unexpected bill, such as a car repair or doctor’s visit.
A Bankrate survey shows that just 39% of people could pay for a surprise $1,000 expense.
If you find yourself in this category and have already used the recommendations above, it’s time to focus on paying off debt to build an emergency fund.
Being buried under debt makes it difficult to meet your monthly expenses. And even harder to save for the future. In short, credit cards and consumer loans can undermine your financial health.
Paying down high-interest debt can be challenging, but these two strategies could help you get out of debt faster.
Starting small, the snowball method keeps growing as it gains momentum. No matter how much the loan is or its interest rate, the borrower pays the minimum. They’ll then pay off their smallest debt with the surplus cash they have in their budget.
As soon as the smallest debt is paid, they roll the amount of that payment into the next smallest debt. This method increases monthly payments toward larger loans as smaller ones are repaid.
The strategy exploits early wins by taking care of small balances first and progressing to large or intimidating balances as time goes on.
Instead of taking account of balances, the avalanche method considers the interest rates on the loans. Budgeters evaluate loans based on their interest rates but ignore the total amount of each loan.
Similar to the snowball method, they will make minimum payments on each loan every month. The difference with this strategy is that they will use their budget surplus to pay off the highest interest rate bill.
Budgeters will turn their attention to the balance with the next highest interest rate once the loan with the highest interest rate has been paid down.
When debt is not properly addressed, it can be devastating. Nevertheless, if a person decides to use a payment method, they are in charge.
It is easy to overspend whenever it is so easy to use a credit card or your smartphone to make a purchase.
A few lattes or trips to the convenience store might not seem expensive at the point of sale, but they can rapidly add up. The convenience of ordering through Amazon Prime allows you to spend $20 here and $40 there directly from your living room.
Establishing a “hold” period on all purchases is an excellent way to keep spending under control. For example, it might be a good idea to wait 24 hours before making an online purchase rather than clicking “buy now.” That way, the rush of dopamine that comes along with instant gratification is eliminated, and logic and reason have a chance to take over.
A 30-day waiting period may be appropriate for large purchases, such as a new couch, designer clothing, or flat-screen TV. However, it may turn out that you don’t actually need it after all during that time.
Again, unexpected bills may require people to dip into retirement savings or rack up credit card debt without an emergency fund. As such, it’s essential to have at least three to six months’ worth of living expenses in the bank to keep your finances in good shape. So, keep adding to the emergency fund you’ve established until you reach that goal.
Your cash reserve could help you deal with a financial setback, such as a lost income, an emergency room visit, or an unexpectedly expensive car repair.
The best place to keep your emergency savings is an account where you earn a higher interest rate than a typical savings account, which is still accessible to withdraw funds quickly. Savings accounts with high yields, online savings accounts, money market accounts, or checking and savings accounts are all good options.
Depending on how you manage your finances, you may thrive in some areas and struggle in others. While you may be drowning in debt, for instance, you may be making all of your minimum payments on time, or you may manage your debt well but have no retirement savings. Unexpected expenses can wipe you out, just like the financially vulnerable.
You may find more helpful resources in this group than in others. But, here are a few for addressing possible financial challenges.
As part of your overall financial plan, remain diligent about managing your debt. Again, creating and sticking to a budget is a start. But now it’s time to step up your
If you don’t have an established credit history, you have two options. The first is to obtain a secured credit card or co-signed card. The second is trying a credit-builder loan, secured loan, or co-signed loan.
However, since 70% of the United States population carries a credit card, you don’t have to worry about building credit. You do, however, know what your credit score is.
Of course, paying off your balance helps. After all, if you have a lot of debt, especially credit card debt, your score may suffer.
Also, look for any errors on your credit report and correct them as soon as possible. An improved credit score typically means an easier time securing a loan at a more favorable rate.
Unless you break down the process into small, actionable steps, saving for a down payment on a house can seem insurmountable. But, if you use a few shortcuts and tricks, you might be able to accomplish it sooner than you thought.
Saving enough money to retire is the most common long-term financial goal. To make sure you’re really saving enough, you need to figure out how much you’ll need for retirement. Often, That amount is determined by adding 10% or 15% of your salary to a tax-advantaged retirement account, like a 401(k), 403(b), or traditional IRA.
To determine your specific retirement needs, revisit your budget. By doing so, you can estimate your desired annual living expenses when you retire. Next, subtract the retirement income from your 401(k), Social Security, etc. Finally, calculate how many retirement assets you will need for the date you want to retire.
Knowing this figure gives you a target to aim at to save accordingly. Even if you’re still paying off your debt, you can still contribute to your retirement savings. For example, if you have an employer-sponsored retirement plan, ensure that you’re utilizing your employer’s match.
Based on the 2022 Wealth & Wellness Index, people’s sense of financial health is mainly dependent on their income, their debt, and their savings. More specifically, Americans now feel financially healthy if they earn at least $122,000 a year, which is more than twice as much as the national average.
We’ve previously shared numerous tips on how to reduce spending and increase your savings. But, at this point, you should be focusing on earning more money.
You don’t have to quit your job or even side hustle. Instead, you could improve your current job skills via workplace training or getting a new certificate. This makes you more valuable, meaning that you can ask for a raise or promotion.
Another suggestion if you want to monetize your current position is to work overtime if you have the availability. Or volunteer to take on additional responsibilities.
If the above isn’t an option, you could look for a higher-paying job.
Another idea? Find additional revenue streams outside of your day job. This could be working part-time until you’ve reached a goal like paying off debt or starting a side hustle. Ideally, the latter can become a source of passive income.
A financially healthy person manages all aspects of their financial lives successfully. In other words, they’ve maintained good or excellent credit, kept debt in check, have an emergency fund, and are saving for retirement. If you fall into this category, you must remain committed to your financial goals and stay on course.
You should maximize your efforts at this point and ensure that you’re making the most of what you have.
For instance, boosting your retirement savings. And this involves more than meeting your employer’s match or automating your savings. Some suggestions would be;
“One of the most important personal finance moves you can make is starting an investment portfolio. If you’ve never done it before, it can seem intimidating,” writes Peter Daisyme in a previous Due article. Having this in place will help you outpace inflation, protect your assets, accumulate wealth, and diversify your income to absorb market ebbs and flows.
Diverse assets should be included in your investment portfolio, such as;
“One of the most important concepts in building an investment portfolio is balancing that portfolio; in other words, you’ll need to choose the right selection of assets to contain within your portfolio,” Peter advises. “Most of the time, the main factor for your decision-making here is a risk.”
Having the ability to make sound financial decisions is referred to as being “financially sound” in the world of finance. Stability, security, and progress are other characteristics of financially sound decisions or individuals.
Having financial soundness can bring several benefits that can help you live a more comfortable life, including;
You don’t have to rock the boat if you’re fortunate enough to have achieved the highest financial health scores. Instead, keep doing what you’ve successfully been doing. And most importantly, project and maintain your financial health.
One way to go about this is by aiming to achieve a “perfect” credit score. You will qualify for the most favorable terms if you have an 800 or higher credit score.
To achieve this goal, make sure that you;
Additionally, you need to ensure that you have adequate health and financial insurance coverage. Health insurance, disability insurance, and life insurance are some examples.
Several factors, such as your age, occupation, family history, etc., determine the type of insurance you should have. Knowing what’s available can be confusing, but it helps you make sound financial decisions if you know what’s available.
To begin protecting your family and finances from risk, you may want to speak with your insurance company. Consult your insurance agent about any changes you might need to make to your current policy. Discover the differences between standard coverage and supplemental coverage, and decide if increasing your coverage makes sense for your circumstances.
Estate planning documents, such as a will, are essential. These include powers of attorney, financial powers of attorney, and living wills.
Your loved ones will have the direction they need during a difficult time if you let them know how you intend to handle your financial assets before you die. Even if you are just writing a simple will, you should have an estate plan in place as soon as possible.
You should seek a professional for more information about what you need based on your state’s specific requirements.
Budgets are a way of understanding what you spend versus what you make.
As for budgets, yes, you should make one. But, keep in mind that they come in all shapes and sizes. Tracking your spending and providing rigid allowances are definitely important. Still, you can also go lax: automating savings is technically a budget if you automate a certain amount of your earnings each month. A golden rule is the 50/20/30.
To assess borrower risk, creditors use a credit score. Typically, scores from FICO are used. Your credit score is determined by how much debt you have, how many credit cards you own, and whether you pay your bills on time.
When you buy a car, get a mortgage, get a loan, or open a new credit line, your credit score is reviewed by the people who can grant you those grown-up things. (Your credit score ranges from 300 to 850). A landlord, as an example, may be less likely to rent to you if you have a low credit score.
Don’t neglect your credit score and shield it from careless debts. In addition to your credit report, you can check your credit score every year to ensure it reflects your actual debts and credit cards. Whenever you want, you can check your Score for free online.
There is no one answer to this question because everyone’s situation is different. If you want to determine whether your debt is good or bad, then you need to ask yourself some general, personal questions regarding your situation.
For instance, if going to college or paying for certification will enrich you financially, this is considered a “good” debt.
There is no universal number that applies to everyone. Instead, it depends on how much your life costs.
Typically, you should have three to six months’ worth of living expenses on hand for emergencies. As a result, you can maintain your lifestyle if you suddenly lose your job or fall upon hard times without getting into debt.
You don’t have to spend hours crunching numbers to figure out how much money you’ll need for retirement.
Start by remembering two easy rules;
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