How to Measure Your Household Financial Health. Dealing with finances is one of the most challenging parts of navigating the world as an adult. Part of that is knowing how to accurately measure the financial health of you and your household. If you haven’t learned much on budgeting and financial planning thus far in life, you may find it difficult to determine your own financial health. Here are a few things you can look at to help you figure it out!
Liquid Net Worth
The first element you need to look at is your liquid net worth. This term refers to the assets that you have that you could pull out immediately to deal with an emergency, or even just make a needed purchase. For the most part, this refers to your savings and the actual money that you have at your disposal. If you find that you aren’t in a financially stable position, starting by increasing your savings can help you to get to a more comfortable and financially healthy place.
Credit
Another factor on How to Measure Your Household Financial Health is your credit rating. Next, you need to look at your credit to see where it is currently standing. Building your credit takes time and effort, but if you don’t have the credit you need, you will have a difficult time qualifying for loans and even renting an apartment in some cases.
Some people have bad credit, while other people simply don’t have credit at all since they haven’t had to pay back loans or used any credit cards. A high credit score will help you if you plan to build or buy a home, while a lower score will make it difficult for lenders to approve of such a loan.
Your Income
Last, you also need to be thinking about the money that is coming in each month. If you have enough income to meet your needs and a little extra, you are in a good financial place. If you find that your monthly income isn’t enough to help you meet your financial needs while saving and still having a little fun, it may be time to seek out a new income source. This can come from requesting a raise, or even changing your job so that you can make more money.
Taking care of your financial health is a huge task that can be hard to manage. The first step is simply realizing how your financial health is doing now before working to improve it. Once you understand your financial health, you can start making better financial decisions moving forward. We hope you found our tips helpful on How to Measure Your Household Financial Health
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