These were Five Guidelines for Financial Health that were developed by a survey company regarding Guidelines for Financial Health. A score of 5 means that you probably will end up financially well off, while a poor score means you will probably end up without the income or savings you need in retirement.
The correct answers are shown in bold, if you want to obtain a score of five. We also decided to expand on each of these items to help readers understand the meaning of each of these areas and how they can affect your finances over the long term. Let us know if you find this useful! This post regarding Guidelines for Financial Health could be one of the most important posts on blog that you have ever read! Do you need a million to be able to retire comfortably? Probably not, but check out this post if you want to learn more.
Five Guidelines for Financial Health
- Did you save any money last year? Yes
- Did you miss any payments on any obligations in the past year? No
- Did you have a balance on your credit card after the last payment was due? No
- Including all of your assets, was more than 10% of the value in liquid assets? Yes
- Is your total debt service (principal and interest) less than 40% of your income? Yes
More Details about the Five Guidelines for Financial Health
Did you save any money last year? Yes – This is an absolute must if you are going to have money for retirement and emergencies. Set aside at least 10% of your gross income. Invest diversely and do not touch it unless there is an extreme emergency or you retire.
Did you miss any payments on any obligations in the past year? No – Not only will you maintain your credit rating, you will avoid lots of penalty fees as well as interest charges. Following this rule can also save you money on loans in terms of lower interest rates.
Did you have a balance on your credit card after the last payment was due? No – You never want to carry a balance over or past the due date. At the lowest level the interest rate is approximately 20% for most credit cards on unpaid balances and as high as 30% on store credit cards.
Including all of your assets, was more than 10% of the value in liquid assets? Yes – Important for emergencies, liquid assets are investments that can quickly be turned into cash to deal with an emergency. You get to avoid penalties, high interest charges, peace of mind etc by using liquid assets to look after the financial emergency
Is your total debt service (principal and interest) less than 40% of your income? Yes – This is a key measure that most lenders use to help them decide to lend money to a customer as well as what rate to charge. If you are over 40%, chances are you will not get approved for a loan. In fact many lenders look for 30% or less before they will consider lending money at the best rates.
Think about these Guidelines for Financial Health as they pertain to your own situation and then take the appropriate action that is needed to improve your situation.