6 Financial Numbers You Should Always Know
Gauging your financial health can be as easy as knowing a few numbers.
When it comes to your finances, it can be easy to feel overwhelmed with the amount of numbers thrown your way in the dozens of statements and emails you receive. While all of those various numbers are important to be aware of, you can get a pretty good overall picture of your finances by focusing on just a few of these. Here are 6 numbers you should always know, even if you’re not a numbers person.
Your credit score is important in almost every lending situation. If you’re looking to purchase a home, a car, or even increase the limit on a credit card, your credit score will come into play. This score makes it easier for lenders to determine your overall creditworthiness. Your score can determine if you’re eligible for a loan and what rates you qualify for. This means your credit score can determine the ultimate cost of your future purchases.
It’s always important to practice smart credit habits to keep your score as “excellent” as possible. By paying bills on time, in full, and by keeping your credit utilization rate low, you put yourself in a good position to receive the best rates possible. You can check your own credit score for free on www.creditkarma.com.
When it comes to your savings, you should know how much available cash you have, as well as how much is in your emergency fund. While your available cash may help with a planned large purchase or down payment on a home, your emergency fund will help you when you’re faced with an unexpected expense or job loss. By knowing these numbers, you can get an understanding on where you stand if an emergency arises or if you have enough to meet your long-term goals.
Monthly Net Income
Your monthly net income is the amount you take home each month after taxes and deductions. Knowing your monthly net income is important as it lets you know how much you have to work with. This number can be significantly less than your gross income, so it’s important to know. Knowing your net income can help you create a monthly budget, determine how much you can spend, and how much you can save.
Just as your monthly net income is important to your budget, so are your expenses. This is the amount you spend throughout the month on rent, utilities, groceries, clothing, fuel, etc. Including your expenses in your budget lets you monitor how much is going out vs. coming in. Your monthly net income should always exceed your monthly expenses. Knowing this number will allow you to make changes to your spending habits and see where you can cut back, keeping you financially fit.
Your monthly debt is the amount you owe each month to a lender or creditor. Your debts can include your mortgage, car payments, credit card bills, student loans, and any other type of loan. This number is important to your overall financial picture. Debt that becomes unmanageable can be a major financial burden. Like your net income, knowing your monthly debt can better prepare you to see where you stand that month. Too much debt in a given month may mean you need to spend less on discretionary expenses. The smaller the debt, the more you have to spend and save!
Your net worth may be the most important financial number in your life. Calculated by subtracting your total liabilities from your total assets, your net worth lets you see if you’re headed down the right financial path and helps track your progress. It’s a look at your total financial health and helps you set future goals. Knowing your net worth will encourage you to make the right financial decisions as you try and reach these goals.
Once you know these financial numbers, you can begin working to improve them. While this won’t happen overnight, you now have a great starting point and better grasp of your overall financial wellness. If you’re looking to get your finances back on track but you’re struggling with debt, consider visiting our website or giving Tayne Law Group a call at 631-470-8204.