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Assessing Your Financial Pulse: A Check on Your Resolutions


Assessing Your Financial Pulse: A Check on Your Resolutions

As we find ourselves in February, it's an opportune time to gauge the pulse of your financial health and check if your New Year's resolutions are still on track. Much like personal physical or mental health goals, financial well-being often takes center stage for many individuals. So, how do you determine if your financial health is robust? Here's a comprehensive checklist to guide you: 

  • Credit Score: Strive for a credit score of at least 680. The higher the score the better as a high score not only reflects your ability to manage debts but also opens doors to better deals and rates.
  • Retirement Savings: Utilize a retirement calculator to ensure you're on a healthy savings track. Remember, every contribution, no matter how small, contributes to your financial security during retirement.
  • Debt-to-Income Ratio: Keep a close eye on your debt-to-income ratio. This refers to the percentage of your monthly income that is spent on paying debts (home mortgage, credit card, car payment, etc.). Try aiming for a ratio of 45% or less. Calculate the ratio by dividing your monthly debt payments by your gross monthly income. 
  • Short-Term Savings: Building a short-term savings or emergency fund is crucial for financial health. Aim to save enough to cover three to six months of living expenses.
  • Housing Ratio: Follow the basic home ratio guideline, ensuring that housing costs constitute 28% or less of your gross pay. For instance, if you earn $5,000 per month, your rent should not exceed $1,400.
  • Return on Investments: While market predictions are challenging, explore financial instruments to optimize returns. An ideal return on investments ratio is 4% - 10%, with variations based on factors like age, life goals, and risk tolerance.

After assessing these ratios, reflect on the overall condition of your financial health. Are you in good shape, or do adjustments need to be made? Similar to physical goals, even small financial adjustments today can yield positive results over time. Regular check-ins ensure that you stay on the path to financial well-being and achieve your long-term goals.

Did you know TruBank has a wealth management service to help with your financial goals & financial well-being? Focus Investment Center is available for you to talk with someone from a few questions to full life & retirement planning. 

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