How to Self-Diagnose Your Financial Health

Generally, your financial health is the state of your personal monetary affairs. Financial health focuses on many dimensions, such as the amount of money you have, your income, and expenses.

It is as important as your physical health. Diagnosing your financial health helps you determine issues and then analyzing these problems to come up with practical solutions. In today's article, we will give you a few tips that will help you self-diagnose your financial health. Read on!

Check your income

When you try to comprehend your financial situation, the first thing you should focus on is your monthly income. For example, how many people in your family are currently working? Does any of your family members receive a pension or government benefits?

Besides, do your family members work on commissions or do they receive any performance-related bonuses? If you get sick, what will happen to your income? You must answer these questions before you move to the next step.

After you have determined the minimum level of your income, then you can compare it to your expenses. Are your expenses exceeding your monthly income? If yes, find ways to cut back or make efforts to supplement your income.

You can do this by finding a part-time job or keep an eye on any in-house job openings. Also, if you want to increase your income, you can ask for a raise or plan on getting a promotion.

Analyze your expenses

If you are not fully aware of your monthly expenses, you will always face surprises, which will give you stress and make you financially unstable. Keeping track of your monthly expenses is important to your financial health.

For example, by diagnosing your financial status, you can either achieve financial security or go bankrupt. If you are wondering why we said that, then let us tell you that it all depends on how much effort you put in the process of diagnosis and treatment.

So, once you diagnosed the problem, it is time to create a list of your monthly expenses. Use your bank statements to calculate payments for your expenses and utility bills. You can use a spreadsheet program like Microsoft Excel to properly categorize each of your expenses.

Focus on your savings

Everyone gets hit by unexpected situations from time to time. For example, you may have a medical emergency or your car can blow a gasket or your phone can break, etc. Likewise, what if your wage is lower than the previous month?

So, if you want to avoid any of these situations or want to cope with them, you need to diagnose your savings. In simple words, how much money do you have in your savings account?

Also, if you having zero balance in your savings account, then think about how much you can save in the coming months. Research shows that over 50% of Americans have at least $1,000 in their savings accounts. Likewise, over 40% of people in the U.S don't have savings at all.

So, we recommend you save money daily. You can plan your meals in advance and buy essential food items. Don't make impulse purchases and lower your monthly phone bills. Make sure you review your internet and cable bills and buy items at a discount.