Taking time to routinely evaluate the health of your finances can go a long way toward gaining financial security.

In a world where prices of goods are skyrocketing and bills are steadily rising, it’s an important skill to learn how to assess financial health. You should implement scheduled evaluations of your finances, just as you’d visit a medical professional for regular health checkups. Many experts suggest finance checkups about once a year to preserve your overall financial health.

With or without observable financial risk, it’s important for you to constantly determine the state of your finances. While it may seem like a daunting task, doing this makes sure that potential complications in your personal expenses are mitigated immediately as they arise. Read on to discover tips on how to measure your own financial health.

What Is Financial Health?

Simply put, financial health refers to the general state of your monetary situation. This involves personal debt, retirement planning, income and expenditure, and many other assets. Many experts differ on how they choose to measure financial health, so you must assess your own situation and financial needs in a way that suits you.

Importance of Evaluating Financial Health

Evaluating financial health is an important skill for several reasons. Good financial health allows you to achieve your financial needs and prepare for any unexpected emergencies that may arise along the way. Individuals that possess good financial health display resiliency without the need to worry about cash on an everyday basis.

On the other hand, having poor financial health, which can involve having a low credit score and possessing little to no savings, can put both you and those who financially depend on you at risk.

Key Factors in Assessing Financial Health

Several key factors come into play with financial sustainability. First, you must pay good attention to your credit, as this can give you the opportunity to acquire loans when needed. A sufficient credit score is a significant indicator of financial health. Next, you must reduce the amount of debt you rack up. Having loans that exceed personal income can spiral into negative consequences in the long run. You must also have long-term emergency savings to achieve important financial goals. Finally, good insurance coverage ensures that you can prepare for medical expenses and personal accidents in the future.

5 Tips for Evaluating Financial Health

Your finances can be a significant deal breaker. Thus, knowing how you fare in terms of your budget is important to your financial growth and development. These are five important steps you can take to critically assess your financial health.

1. Observing Your Debt

First, you should assess whether you are handling debts successfully and on time. These debts may include credit card payments and student loans. A good metric is your debt-to-income ratio; this is a comparison of your monthly obligations to your income. The recommended value by lenders and experts is no greater than 30 percent.

Paying back an increasing amount of debt is important — the debt-to-income ratio is key in determining a credit score. You must frequently assess your finances and learn how to mitigate spending to reduce overall balances. Also, consider your present interest rates. Refinancing loans or switching credit cards may help you save money.

2. Creating or Updating Your Budget

As a consumer, you need to be aware of how you’re spending your money. A budget streamlines the process of making adjustments to financial expenses depending on needs or income changes. You will be able to strategize your financial goals based on cash flow rates and expenditures.

Creating a budget is simple — all you need is to first assess your income, then tabulate recurring payments and variable expenses. You can update your personal spreadsheets by frequently accessing your balance on banking and credit card websites. This will make sure that you avoid spending more money as your income grows.

3. Evaluating Investments for Future Emergencies

Make sure that you build an emergency fund (ideally, about three to six months’ worth of expenses) for use in future emergencies. Furthermore, you should have sufficient insurance coverage that matches life events and future goals.

Failing to be insured can come at the expense of significant financial loss. To avoid dismantling a stable financial plan, you should research more about ways to save on insurance. Changing insurance companies or combining policies may allow you to have a big boost in your financial health.

4. Regularly Check Your Credit Report

You need a good credit score for a lot of things, from taking out a loan to renting a house or apartment. It’s a good idea to always keep an eye on your score to ensure it’s where you want it to be or to gain insight into what you could be doing better to improve it. Websites like Experian and Equifax enable you to check your score for free. If you’re disappointed in the number, there are several things you can do, such as paying off old debts as best as possible, paying bills on time, and so on.

Knowing your score also gives you an idea as to what types of credit you can qualify for.

5. Finalizing and Reviewing a Suitable Estate Plan

Estate plans determine where your assets will be channeled when you pass away. You must be confident about who to choose as executors or trustees in your will. Determine whether they are capable of carrying out what you want to happen with your financial assets.

However, if you have still yet to make an estate plan, it is suggested that you begin drafting a document and consider who to place as beneficiaries. Estate plans help prevent time-consuming hassles that may arise in the future for your loved ones.

Conclusion

Assessing your financial health is important to ensure that you are on the pathway to attaining your financial goals. Evaluating debt, creating a budget, preserving emergency investments, checking your credit score, and reviewing estate plans all help in minimizing long-term difficulties. There’s no need to rush in making adjustments to your finances after a thorough evaluation — gradual changes after regular assessments will be the key to overall stability.

financial health

Finny the Finance Bot says…

How can I evaluate the health of my finances?

Here are some ways to evaluate the health of your finances:

  1. Review your budget: Look at your monthly income and expenses and make sure you’re spending less than you earn. A balanced budget is a sign of good financial health.
  2. Check your debt: Look at your credit card balances, personal loans, and other debt. A high level of debt can indicate poor financial health and limit your ability to save and invest.
  3. Track your savings: Evaluate your progress towards building an emergency fund and saving for long-term goals, such as retirement. A solid savings plan is a key component of good financial health.
  4. Assess your investments: Review the performance of your investments and make sure they are aligned with your goals and risk tolerance.
  5. Monitor your credit: Review your credit report regularly to ensure accuracy and identify any areas for improvement, such as paying bills on time and reducing debt.
  6. Seek financial advice: Consider working with a financial advisor to help you assess your financial health and develop a plan to reach your goals.
  7. Evaluate insurance coverage: Make sure you have the right amount and type of insurance coverage for your needs, including health, life, and property insurance.
  8. Plan for retirement: Evaluate your progress towards retirement savings and consider your expected income in retirement and your desired lifestyle.

Remember, the key to evaluating the health of your finances is regularly monitoring your progress and taking action to improve areas that need attention. A healthy financial situation is not achieved overnight but through ongoing effort and planning.

The author generated Finny the Finance Bot’s text in part with GPT-3, OpenAI’s large-scale language-generation model. Upon generating draft language, the author reviewed, edited, and revised the language to their own liking and takes ultimate responsibility for the content of this publication.

About the Author

Scroll to Top

Client Credit Report Authorization

You hereby authorize and instruct Debt Reduction Services, Inc. (DRS, dba Money Fit by DRS) and/or its assigned agents to:
  • Obtain and review your credit report, and
  • Request verifications of your income and rental history, and any other information deemed necessary for improving your housing situation (for example, verifying your annual property tax obligations and homeowner’s insurance fees)
Your credit report will be obtained from a credit reporting agency chosen by DRS. You understand and agree that DRS intends to use the credit report evaluate your financial readiness to purchase or rent a home and/or to engage in post-purchase counseling activities and not to grant credit. You understand you may ask any questions pertaining to your credit report. However, while DRS will review the information with you, the company is not able to furnish you with a copy of your credit profile. You hereby authorize DRS to share your information from your credit report and any information that you provided (including any computations and assessments produced) with the entities listed below to help DRS determine your viable financial options.
  • Banks
  • Counseling Agencies
  • Debt Collectors
  • Landlords
  • Lenders
  • Mortgage Servicers
  • Property Management Companies
  • Public Housing Authorities
  • Social Service Agencies
Entities such as mortgage lenders and/or counseling agencies may contact your DRS counselor to evaluate the options for which you may be eligible. In connection with such evaluation, you authorize the credit reporting and/or financial agencies to release information and cooperate with your DRS counselor. No information will be discussed about you with entities not directly involved in your efforts to improve your housing situation. You hereby authorize the release of your information to program monitoring organizations of DRS, including but not limited to, Federal, State, and nonprofit partners for program review, monitoring, auditing, research, and/or oversight purposes. In addition, you authorize DRS to have your credit report pulled two additional times to conduct program evaluations. You also agree to keep DRS informed of any changes in address, telephone number, job status, marital status, or other conditions which may affect your eligibility for a program you have applied for or a counseling service that you are seeking. Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.

Client Privacy, Data Security, and Client Rights Policy

NOTE: This sheet is to inform new or returning clients about our services, records, fees, and limitations that may affect you as a consumer of our services. This form also discloses how we might release your information to other agencies and/or regulators. If you do not understand a statement, please ask a Debt Reduction Services (DRS) counselor for assistance.

Debt Reduction Services, Inc. (DRS) has put into place policies and procedures to protect the security and confidentiality of your nonpublic personal information. This notice explains our online information practices and how we use and maintain your information to conduct our financial education and credit counseling sessions and to fulfill information and question requests. This privacy policy complies with federal laws and regulations.

To provide our financial education and credit counseling services, we collect nonpublic personal information about you as follows: 1) Information we receive from you, 2) Information about your transactions with us or others, and 3) Information we receive from your creditors or a consumer reporting agency. We do not share this information with outside parties.

We use non-identifying and aggregate information to better design our website and services, but we do not disclose anything that could be used to identify you as an individual.

You hereby authorize DRS, when necessary, to share your nonpublic personal, financial, credit, and any information that you provided (including any computations and assessments produced) with the following entities in order to help DRS provide you with appropriate counseling or guide you to appropriate services: third parties such as government agencies, your lender(s), your creditor(s), and nonprofit housing-related and other financial agencies as permitted by law, including the U.S. Department of Housing and Urban Development.

To prevent unauthorized access, maintain data accuracy, and ensure the correct use of information, we have put in place appropriate physical, electronic, and managerial procedures to safeguard and secure the information we collect online. We limit access to your nonpublic personal information to our employees, contractors and agents who need such access to provide products or services to you or for other legitimate business purposes.

Debt Reduction Services, Inc. complies with the privacy requirements set forth in the HUD housing counseling agency handbook 7610.1 (05/2010), including the sections 2-2 Mc, 3-1 H(2), 3-3, 5-3 F, and Attachment A.5. At all times, we will comply with all additional laws and regulations to which we are subject regarding the collection, use, and disclosure of individually identifiable information.

  1. Services: DRS provides the following housing-related services: counseling that includes Homeless Assistance, Rental Topics, Pre-purchase/Homebuying, and Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase); Education courses that include Financial literacy (including home affordability, budgeting, and understanding use of credit), Predatory lending, loan scam or other fraud prevention, Fair housing, Rental topics, Pre-purchase homebuyer education, Non-delinquency post-purchase workshop (including home maintenance and/or financial management for homeowners), and other workshops not listed above.

Please refer to DebtReductionServices.org for details of our services.

  1. Limits: Our services are limited to our normal weekday business hours. We do not provide individual counseling or education services after hours or on weekends, although our education courses are available 24/7.
  2. Fees: We do not charge fees for our financial management counseling and education. However, if you use them, you may have to pay for our Debt Management Program, Student Loan Counseling, Bankruptcy Certificate Services or certain financial education courses (homebuyer education, rental topics, fair housing, predatory lending, and post-purchase-non-delinquency including home maintenance and/or financial management for homeowners).
  3. Records: We maintain records of the services you receive, including notes about your progress or other relevant information to your work with us. You have the right to access and view your records by making a request to your counselor.
  4. Confidentiality: We respect your privacy and offer our services in confidence with the understanding that we may share such information with auditors and government regulators. Certain laws or situations may also lead to disclosing confidential issues, such as those involving potential child abuse or neglect, threats to harm self or others, or court subpoenas.
  5. Refusal of Services: You have the right to refuse services without any penalty or loss.
  6. Disclosure of Policies and Practices: You will be provided our agency disclosure statement.
  7. Sharing of Information: Sometimes we will need to contact other agencies or we may need to share your information, including your records, with other agencies or with regulators. We will do this only if you sign this form that gives us permission except for limited reasons; please see # 5 above for examples of such situations.
  8. Other: You have the right to be treated with respect by our staff, and we expect the same from you in return. We encourage you to always ask questions if something is not clear. We also encouraged you to express your thoughts and advocate throughout our services.

You acknowledge that this authorization will remain in effect for the duration of time that DRS serves as your housing counselor or financial education provider. You also acknowledge that should you wish to terminate this authorization, you will notify DRS in writing.

Disclosure  Statement

NOTE: If you have an impairment, disability, language barrier, or otherwise require an alternative means of completing this form or accessing information about our counseling services, please communicate with your DRS representative about arranging alternative accommodations.

Program Disclosure Form

Disclosure to Client for HUD Housing Counseling Services

Debt Reduction Services, Inc. and its financial education arm, Money Fit by DRS, offer the following housing counseling and educational services related to housing, personal finance, and bankruptcy certificates to consumers:
  • Housing Education Courses: DRS offers many online self-guided education programs classified as Financial, Budgeting, and Credit Workshops (FBC), Fair Housing Pre-Purchase Education Workshops (FHW), Homelessness Prevention Workshops (HMW), Non-Delinquency Post Purchase Workshops (NDW), Predatory Lending Education Workshops (PLW), Pre-purchase Homebuyer Education Workshops (PPW), and Rental Housing Workshops (RHW). These courses help participants increase their knowledge of and skills in personal finance, including home affordability, budgeting, and understanding the use of credit, as well as predatory lending, loan scams, and other fraud prevention topics, fair housing, rental topics, pre-purchase homebuyer education, non-delinquency post-purchase topics including home maintenance and/or financial management for homeowners, homeless prevention workshop, and other workshops not listed above relating to personal finance and housing. Course details are found below under “Housing Workshops.”
  • Home Equity Conversation Mortgage (HECM) Counseling (RMC): Via telephone and virtual platforms, we offer the required HECM counseling nationwide in addition to in-person counseling in Boise, Idaho. We also offer in-home counseling options in thirty counties across southern Idaho for an additional fee to cover our travel and additional staff time costs.
  • Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase) (FBC): Clients receive counseling and materials on the proper maintenance of their home and mortgage refinancing. Clients can find help and resources by phone, in our Boise office, or virtually on all topics related to stabilizing their long-term homeownership.
  • Services for Homeless Counseling (HMC): Clients receive phone, virtual, or in-person (Boise) counseling to evaluate their current housing needs, identify barriers to and goals for housing stability, establish a path to self-sufficiency, and connect with emergency shelters, income-appropriate housing, and/or other community resources (e.g. mental healthcare, job training, transportation, etc.).
  • Pre-Purchase Counseling (PPC): Clients receive counseling through the entire homebuying process. Assistance may involve creating a sustainable household budget, understanding mortgage options, building their credit rating, and putting together a realistic action plan to set and achieve homeownership goals.  Additionally, clients will receive materials and resources about home inspections and other homeownership topics relevant to successfully maintaining a home.
  • Rental Housing Counseling (RHC): Via phone, in-person appointments (Boise, ID), or virtual platforms, clients receive housing counseling relevant to renting, including rent subsidies from HUD or other government and assistance programs. Topics can also address issues and concerns having to do with fair housing, landlord and tenant laws, lease terms, rent delinquency, household budgeting, and finding alternate housing.
DRS also offers the following services:
  • A Debt Management Program (DMP) for consumers struggling to pay their credit cards, collections, medical debts, personal loans, old utility bills, and past-due cell phone accounts;
  • The Budget Briefing and Debtor Education Certificates that are required during the Bankruptcy filing process;
  • A Student Loan Repayment Plan Counseling and application service.

Relationships with Industry Partners

Through such services, DRS has established financial relationships with hundreds of banks, credit unions, and creditors such as American Express, Bank of America, Barclays, Capital One, Chase, Citibank, Credit One, Discover, Synchrony, US Bank, USAA, Wells Fargo, and others.

No Client Obligation

The client is not obligated to receive, purchase or utilize any other services offered by DRS or its exclusive partners to receive financial education or housing counseling services. Alternatives: As a condition of our counseling services, in alignment with meeting our client services goals, and in compliance with HUD’s Housing Counseling Program requirements, we may provide information on alternative services, programs, and products available to you, if applicable and known by our staff. Alternative DMP services include negotiating better repayment terms directly with your individual creditors, paying your debts as agreed, or, in extreme cases, filing for personal bankruptcy. Alternative credit and education services can be found through MyMoney.gov or the Jump$tart Clearinghouse of online financial education resources. Housing counseling alternatives can be found through HUD at www.hud.gov/findacounselor.
Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.

Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

RentalFair HousingPredatory Lending / HOEPAPost-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. creditbudgetinghomeless preventiondebt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).

Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

RentalFair HousingPredatory Lending / HOEPAPost-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. creditbudgetinghomeless preventiondebt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).