The state and stability of an individual's personal finances and financial affairs are called their financial health. Typical signs of strong financial health include a steady flow of income, rare changes in expenses, strong returns on investments, and a cash balance that is growing.
Your financial health takes into account several factors of your personal finance situation (like your net worth, credit score, debt, savings, retirement fund, etc.) to give a holistic look at how prepared you are to meet different financial needs.
10 tips to improve your financial health
CFSI has defined four components of financial health: Spend, Save, Borrow, and Plan. These components mirror your daily financial activities. What you do today in terms of spending, saving, borrowing, and planning either builds towards or detracts from your resilience and ability to pursue opportunities.
The four main areas of financial health that should be examined are liquidity, solvency, profitability, and operating efficiency. However, of the four, perhaps the best measurement of a company's health is the level of its profitability.
Poor financial health can lead to poor health
Financial stress manifests itself in numerous physical conditions. In addition to mood disorders, financial stress contributes to migraine, cardiovascular disease, absences from work, insomnia, and more.
Additional good financial behaviors include: Establishing measurable financial goals and realistic plans to achieve them; Building and maintaining an emergency fund equal to three months of take-home pay; Using a budget to control spending for regular and irregular expenses; Maintaining adequate insurance for property, ...
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