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How to do a Simple Financial Health Check

Your income is the greatest asset you have. With it you not only take care of your and your family’s current needs, but you also have the power to secure your financial future by building wealth. To make sure you’re using your income wisely, use this simple method for completing a financial health check and identifying any possible red flags. 

Use this article to:

  • Figure out how much you’re spending in each main category
  • Compare your spending to the guidelines for each category
  • Spot potential financial problems for each category
  • Make goals to address the potential problems

Step 03 

Calculate the percentage of your income for each category.

Use the following formula: category total/annual take-home income

Hone and Jen’s percentages would be as follows:

Needs – $70,540/$104,260 = 68%

Wants – $21,754/$104,260 = 21%

Savings – $11,750/$104,260 = 11%

Giving – $216/$104,260 = .2%

Step 04 

Compare your percentages to the target percentages for each spending type. Be sure to familiarise yourself with the target percentages in the article, 04 Types of Spending and How Much Each Should Be.

Our example couple, Hone and Jen, haven’t received mortgage debt reduction advice from Futurebound, so they still have 30 years to pay on their mortgage. Their target percentages for each category would be:

Needs – 50%

Wants – 30%

Savings – 10%

Giving – 10%

performing a financial health check