Just like your physical health, your finances need to be checked regularly. The goal is simple: to ensure all aspects of your finances are balanced, under control, and prepared for emergencies.
Let's learn how to perform a financial check-up before it's too late.
The first step in financial evaluation is to ensure that your incoming money exceeds your outgoings.
Record all your income and expenses for a month. If you find that your regular expenses exceed 70–80% of your income, it's a sign that you need to re-evaluate your lifestyle and spending habits.
Debt isn't always bad, but it must be managed. Ideally, total debt payments should not exceed 30% of your monthly income.
If it exceeds that figure, you're already in a dangerous zone. Evaluate which debt is truly productive (e.g., mortgages or business capital) and which is actually eroding your cash flow (like consumer credit cards).
An emergency fund is the primary safeguard against unexpected situations like job loss or sudden medical expenses.
Ideally, an emergency fund should be:
3–6 months of expenses for singles
6–12 months of expenses for those with families
Conduct an annual review of your financial goals: children's education, a home, retirement, or travel. Ensure everything is on track and affordable with your current financial situation.
Financial evaluations aren't about finding fault, but about ensuring you're on the right track. By conducting regular financial check-ups, you can anticipate problems before they escalate, correct course, and build a more stable financial future.
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