Financial planning can be a tricky business. Managing finances is not really as simple as it seems and sometimes you may hamper your financial health without even realizing.
Your overall financial health comprises several things such as:
- Your credit score,
- Your investment portfolio,
- The liquidity of your assets and
- The amount of savings and emergency funds.
A perfect balance of all these factors, though desirable, is very tough to achieve. So don’t kick yourself too much if you struggle. Here are a few signs that you should watch out for and reevaluate your financial health in case you can see a few of them:
1.You have a Low Credit Score
A credit score depicts the creditworthiness of an individual. It takes into account your past credit transactions, its repayment et al and depicts whether or not you are a reliable borrower. In case you have a low credit score, it means that you are a risky borrower and you will have trouble getting any form of credit. Even in case you do get the credit, it would be at a significantly higher interest rate.
You can use our credit score calculator for free and while sitting within the comforts of your home.
2. No emergency fund
Saving and setting aside some part of your income every month for a rainy day in the future is pivotal. The importance of an emergency fund was felt extensively during the COVID 19 pandemic were a lot of people incurred huge unexpected medical expenses while not having a job or having salary cuts.
In case you do not have an emergency fund for any contingent needs, it is definitely time to reconsider your financial plans and take a thorough look at your financial health.
3. You are stuck in a vicious debt circle
Borrowing money can help tide over some emergency expenditures and with the advancement in the fintech sector, getting a loan has become as easy as ordering food online. However, in case you are borrowing money to return older loans or pay your credit card bills, it is safe to say that you are stuck in a debt trap. If that is the case, you should replan your finances or consolidate all your debts for easier repayment.
To know more about how to restructure your debt and consolidate it, refer to one of our earlier blogs here.
4. You are living paycheck to paycheck
In case your income is just sufficient to cover whatever expenditures you are earning and you are not saving anything, it can cause a lot of trouble to your financial planning. This is because saving is the bedrock upon which all future financial decisions and investment prospects rest on.
Therefore, if by the end of the month you are broke, it is time you reconsider your financial health or think about supplementing your current income with some alternate income stream.
To learn more about how to save from your salary, read one of your earlier blogs here.
5. Your net worth is stagnant or declining over the year
If your net worth is declining then it is a dead giveaway that your financial health is not optimal. Net worth is essentially the sum total of all the assets and the income that those assets are generating in a specific period.
In case your net worth is not rising, chances are that there is some problem with the way you are planning your finances. In such a case, you should definitely reconsider your financial goals or even consult an expert about replanning your financial goals.
If the magnitude of the task is bothering you, simply visit our website and put all your worries to rest. We, at EarlySalary, provide several financial services school fee financing, instant personal loans, medical emergency loans and a plethora of other services with no hassle and at just a click of a button. What are you waiting for? Partner up with us and take care of all of your financial wellness needs.
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