There is good debt and bad debt, and there are high credit scores and low ones. And then there are positive net worths and negative ones. Those are just some of the many ways that people gauge their finances. With so many money metrics, how do you actually measure your financial health?
Of course, personal finance is deeply personal. It’s in the name, after all. There’s no single definitive way to measure the financial health of every individual. But, some general signs can help you determine how financially healthy you are.
Signs You’re Financially Healthy
The idea of financial health might mean different things to different people.
While there’s definitely no one set number, be it income or net worth, financially healthy people are generally people with a solid grasp on their current finances and their money plans for a stable financial future.
Here are some of the ways to tell you’re financially healthy:
You Check In With Your Money
There is no one right way to do this. You might use a tool like Personal Capital, or you might use a spreadsheet you created. Heck, some of us balanced a checkbook with a paper register until just a few years ago.
It doesn’t actually matter which method you use to check in on your finances. What matters is you’ve got a system that works for you. That way, you can budget, track your spending, and monitor your savings and investments.
If you want your money to work for you, you have to know where it is and what it’s doing.
You Focus on the Future
Another sign of financial health is the fact you focus on the future. Huge debt and massive consumerism can make it hard to look beyond today.
If you are starting to create plans for your money by setting short-term and long-term goals, you’re heading in the right direction.
Some signs to know you are future-focused include:
- Setting SMART and value-based goals
- Creating an emergency fund
- Setting up sinking funds for things like vacations or home repairs
- Learning more about investing
- Rebalancing your retirement account
While you might not be doing all of these things at once, any amount of future planning is a step in the right direction.
You Commit to Learning
The people who are most comfortable with money all know one thing: you can’t know everything.
The good news is you don’t have to be a money expert to be financially healthy. Instead, commit to continued learning.
Not to toot our own horn, but even bookmarking this site or joining our community is a strong start!
You’ve Forgiven Yourself
No one is perfect. To truly reach the pinnacle of financial health, you need to move on from past money mistakes. Everyone has financial regrets, but there’s no room for them in your life.
Of course, mistakes can provide learning opportunities. However, they can also weigh you down. Forgiving yourself for money missteps is another way to stay future-focused–it might even be the most crucial way.
Signs You’re Struggling Financially
Everyone’s learned a hard lesson with money at some point. Some of us are still learning. No judgment!
Additionally, it’s important to recognize when you’re struggling financially. Sometimes, individuals know it right away. In fact, they might even be the first to say so. Other times, though, it is much harder to spot financial struggles.
These signs should help you get a clearer understanding either way:
You Don’t Think About Your Money at All
There are two problematic ways to spend money: faster than you earn it and just as fast as you make it.
The difference is slight, albeit important.
People who spend money the first way often rack up consumer debt quickly and have the credit card bills to show for it.
People who favor the second option might not be overwhelmed with debt, but they, too, don’t have anything to show for their income. The second they make it, they spend it. No savings, no investing, just spending.
Both types of spending come with their problems; the second, though, isn’t talked about often and can often go unnoticed.
If you’re ready to get started, ask yourself this: What Are The Best Ways to Start Building an Emergency Fund?
All You Think About is Money
When debt is piling up, and bills weigh heavily on your mind, it makes sense to feel like you’re consumed with money–or a lack of it.
If thoughts of money wake you up at night or keep you from sleeping, that’s another critical indicator it’s time to start working on your financial health. Creating a money plan is often the first step in improving your financial health.
If you’re ready to get started, ask yourself this: How Can I Pay Off My Credit Card Debt For Good?
You Only Live in the Present or the Past
When you’re struggling with your financial health, you’re probably suffering from a severe case of YOLO.
Whether you’re buying things or experiences and dropping cash on lattes or Louboutins, there’s a good chance you don’t know where your money is going.
You also probably haven’t given much thought to the future you.
Even if you have your current spending in check, if you find yourself reliving past mistakes, your financial health is still suffering.
Money is complicated, and it is never just about numbers. That means that for many people, complex emotional issues are needing to be addressed. Take the first step today by realizing everyone has messed up with money before.
If you’re ready to get started, ask yourself this: What Savings Goals Should I Focus On First?
You Don’t Ask Questions
Asking a question is the first step to truly learning. However, people are often very quiet about money.
Perhaps they were taught it is taboo or maybe they’ve been made to feel uncomfortable before. Whatever the reason, it is often hard to speak up.
The good news is this doesn’t apply to you! After all, you got here by clicking on a question on a financial literacy site.
Still, committing to learning about money can be an overwhelming task. Finding a platform that supports you and invites you to ask questions is a powerful way to dive in.
If you’re ready to get started:
Understanding Your Financial Health
Financial journeys last a lifetime. Like our physical, mental, and emotional health, financial health can fluctuate.
Sometimes, it might change in a moment’s notice. Other times, it might change more gradually.
Whether you’re in financial sickness or good money health, knowing the signs of financial health is essential to help stay the course on your journey.
Article written by Penny