NDSU Extension Service - Ramsey County

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How is Your Financial Health?

How is Your Financial Health?

 

          Yearly physicals, regular dental appointments, eye exams – all ways of monitoring and maintaining your physical health.  What about our financial health?  How do we measure that?

          Financial health and wellness varies between individuals and it can also fluctuate between times and changing life circumstances for the same individual or family. For instance, a couple may find that their one-income household budget that was being stretched to its limit, become far less tight once their children leave home.

          For many people, a personal assessment of their personal finances amounts to what they perceive they can or cannot afford in their day to day lives. They might base their financial wellness on one or more of the following criteria:

-         the amount of savings in the bank

 

-         the amount of monthly disposable income

 

-         the amount of outstanding credit card debt

 

-         their ability to take an annual vacation

 

-         they don't need to save-up to make a large purchase

 

-         they can comfortably respond to a financial emergency

          What does a financial planner – an expert like your doctor, dentist, optometrist – look for in assessing your financial health?  A financial planner would help you determine if -

-         Is your net worth growing? Your net worth is one of the best barometers for measuring financial health, and it provides an easy way to detect whether a longer-term problem may be emerging, several planners said. To make the calculation, you simply subtract what you owe (your liabilities) from what you own (your assets). So even if your assets are not growing, your net worth will improve if you are paying down debts.

What has changed in your life in the last year?  Big life events can disrupt even the best strategies. Getting married, having a child or even becoming eligible for Social Security or Medicare will require that you make many financial decisions.

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