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Diagnose Your Financial Health

There seems to be all sorts of ways to measure your financial health. Some people prefer tools like Personal Capital to make it easy. Here’s the list of points I’d keep an eye on:

1)  Am I spending significantly less than I earn? If I’m not, I’d take a look at my spending, make a budget, and cut the unnecessary expenses. If that didn’t fix it, I’d look into getting a better-paying job or at other income sources.

2)  Do I have a solid emergency fund? If I have at least 3 months of expenses (preferably 6 months or more), I’d move on. Otherwise, I’d start funneling cash into an emergency account. Even starting with $50 a month is better than no backup fund at all.

3)  Am I learning how to invest in the stock market? I’d take a look at a few retirement suggestions and figure out if I’m on track. If I’m not, I’d look into my options. Do I have a 401k, IRA, or a Roth IRA? Would one of these work for me?

4)  What kind of debt do I have? If I do have some, I’d make a little list and see what I could eliminate. I’d start paying off high interest debt like credit cards before attacking car loans and mortgages.

5)  Are my investments diversified? If all of my retirement savings is tied to one stock (like my company), I’d diversify. I don’t want my entire future to rest on the back of one company.

6)  Am I insured correctly? If I have health insurance, car insurance, short-term disability, long-term disability, and life insurance, I can move on. If I’m missing any of those, I’d look into my options such as Medishare rates which is an alternative to health insurance. I don’t want to be at the mercy of anyone if I get into a car accident and can’t work. I also don’t want to die and leave my spouse with a financial mountain to climb while he’s grieving (he better be grieving…)

7)  Do I have estate planning in place?  If not, I need to set it up for the same reasons I need life insurance.

8)  Am I happy? If I’m not happy with my fiscal life, I need to figure out why and make some changes. For example, I didn’t think we had a good enough plan a few years ago. We came up with a system that made my husband and me happy.