How ‘financially fit’ are you?
When was the last time your finances had a health check?
Many people aren’t sure how healthy their finances are. We visit health care professionals when we are unwell, but the reality is, most people aren’t motivated to keep a regular watch on their money like they are with their physical well-being, which can have a significant impact on their financial health.
So how do you find out how financially fit you really are?
It’s surprisingly simple. The following checks will help you to make more informed decisions about your money and gain a clearer picture of your financial health. And they’ll help identify some financial goals too, which means you’ll be kicking those goals in no time.
There are seven areas to look at when assessing your financial health.
Are you earning enough to support your lifestyle? How can you maximise your earnings? Do you have a monthly budget and are you allocating your funds correctly?
Are you filling in your tax returns properly? Do you owe any tax or are you eligible for a tax rebate from the Government?
Do you have Income Insurance? Critical Illness or Trauma Insurance? If you were unable to work, would your financial obligations still be met?
What kind of retirement do you really want? Comfortable, right? But what financial plans have you put into place to ensure this? Retirement creeps up faster than you think, and it’s important to assess retirement goals… and take action as early as possible.
Do you have a will? Has it been drawn up correctly and witnessed? Will it hold up in court? Has anything in your life changed that requires you to update your will?
Are you in debt? Do you have an accurate understanding of exactly how much debt you have? Do you know your Debt to Income Ratio: This is a figure lenders use to gauge how well you manage your debt. To work out your DTI, add up your minimum monthly debt payments and then divide the sum by your gross monthly income. A DTI less that 25% is healthy, any higher than this and it’s pretty simple. You need to work on paying down some debt, or increasing your income.
What happens if your car breaks down in the same month that you get an injury requiring specialist medical attention? There will be emotional stress to deal with on top of the financial stress of paying all of the unexpected bills. You may need to pay for it on credit, which means the stress will be ongoing until the debt is paid. Having at least 3 months salary sitting in an emergency fund will help you sleep at night.
You can be financially fit…
… but it’s vital to reassess finances regularly for financial security, a better financial lifestyle, peace of mind, financial confidence, and certainty about your money. Where it is, what it’s doing and where it’s going.
Here are some great calculators and tool kits to help you gain a better understanding of your financial health.
If you’re ready to gain a deeper understanding of your financial fitness, and enjoy great financial health, contact a MoneyLink Financial Planner today.
MoneyLink Financial Planning Pty Ltd is an Australian Financial Services Licence Holder. No:.247360
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