3 Questions To Help Measure Your Financial Well-Being

Being financially healthy gives you the power to choose how and when you spend your money—while still doing those things that make you happy.

A recent survey asking over a thousand people how they manage their money found that 50% of respondents struggle to pay their bills on time. And nearly 40% need to work a second job just to make ends meet.

Keeping up with today’s costs, thanks to inflation and rising interest rates, can be a struggle and draining for your health. But there are ways to help you manage your expenses and live life without money constantly intruding every thought.

Ask yourself these three questions to measure your financial well-being:

Question #1

If you need $500, can you access it immediately without touching your savings?

If you answered yes, you’re in the same boat as 32% of the people surveyed. Being in a healthy financial state means your monthly expenses add up to less than you earn—and you can handle financial emergencies while still maintaining your savings. The majority of survey respondents said they feel good about their financial outlook, but only about 30% consistently make the effort to put money into savings.  

If you don’t have emergency funds readily available, you may want to reassess your spending and create a savings plan. That way, you won’t feel as stressed when unexpected costs take you by surprise.

Question #2

If you become sick, can you afford medical treatments and professional care?

Being prepared for out-of-pocket medical costs is important for both you and your financial health. Of the respondents in the survey, 18% admitted that they’re feeling the pinch of inflation on their health care bills. They also said it’s been even tougher keeping up with monthly payments due to their existing debt.

With healthcare costs expected to continually rise, it’s best to put money aside now in case you or your family need expensive treatments or medicine—and to avoid falling into medical debt.   

Question #3

If you lost your job, could you live off savings for at least 6 months?

Losing a job can set off a rollercoaster of emotions. Aside from missing your primary source of income, you’re still responsible for all your living costs while you’re unemployed. And if you’re not financially prepared, you could add even more anxiety and worry to the situation—in fact 63% of Americans live paycheck to paycheck.

With all the recent tech layoffs and economic uncertainty, it’s best to have enough savings on hand to help you survive without a regular paycheck. To add perspective, survey respondents said they need an additional $2,000.00 a month to keep up with living costs—and more than 30% are buying cheaper groceries or cutting back on non-essential spending.

Defining Financial Wellness

The Consumer Financial Protection Bureau (CFPB) determines someone to be financially healthy based on the following four scenarios:

• You have control of your daily and monthly finances. This means you are aware of how your money is being spent and you’re making your own financial decisions.

• You’re capable of surviving financial setbacks. This refers to having money for financial emergencies that could keep you out of debt. You’re prepared when unexpected costs come up and you’re not worried about running low on funds.

• You have the financial freedom to enjoy life. At this point in life, you’re financially sound and can budget your money on things that make you happy—like pursuing hobbies, planning vacations, going out with friends, and more.

• You’re on track to meet your financial goals. This includes your retirement savings, paying off debt, or saving for a house. Sticking to your financial plans helps put you on more solid ground to achieve them.

No matter where you are on your financial journey, you can always make your situation better by focusing on the four areas above.

If you’re looking for more guidance with your financial situation, or if you’re feeling drained from debt—National Debt Relief can help. Our debt coaches can help you pay off your lenders for less than you owe in a shorter amount of time. Relieve yourself from the stress and anxiety of debt so that you can feel like yourself again.