How To Rate Your Financial Health

Everyone should routinely rate their financial health.  Your financial health consists of where you are today compared to where you want to be in the future.  If, for example, your goal is to have a million dollars in the bank for retirement, you will need to periodically review your debt to income to savings ratio to see where you stand and what may need to change.

Begin by setting a long term goal for yourself.  Once you have established what that goal is, you will need to determine how you are going to get there.  This is where you begin to scrutinize many of your spending habits as well as create a plan for debt control. You know that you will need to save and invest a certain amount each month to obtain your end goal, so now you need to know how to make that happen.

Start with your credit report and score.  If you have many negative marks on your report your score will be poor and you will pay much higher interest rates.  Higher interest rates translate into longer repayment times and higher monthly costs.  Fix as many of the issues on your report as you can and raise your score as much as possible.  Once your score is raised, contact any credit issuers that you have which have high percentage rates and ask to be reevaluated.  A higher score will decrease that monthly payment and interest amount and provide you with more money to save and invest.

Compare your cost of living bills and determine how you can streamline these costs.  Some utility providers will give different discounts if you enroll in one of their programs such as paperless billing.  If you have more than one cable provider in your area, shop around for the best rates - and let the person on the other end of the line know you are shopping around!  You can often get a lower rate for a few months if you do this.  Review all of your monthly costs and determine how they fit in with your financial goals.  Cut out any impulsive spending until you’re on track to financial success.

Financial health is a culmination of many different things.  It is about being able to live off of the income you generate and the ability to provide for your own future.  It is imperative as time passes that you continually review your financial health and make any necessary changes to make sure you are on the right track.  Adding a second job to pay down debt or canceling movie night may be required at first, but in the end you will be happier knowing you are financially healthy and in control of your future. 


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