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Financial Health Checkup: 15 Numbers You Need to Know

How well do you know your financial health?

If you’ve ever tried to improve your fitness, you know the importance of goals and measurements. It’s hard to lose weight without a diet, a scale, and an exercise plan, or to get stronger without bothering to count your repetitions at the gym.

What gets measured gets done, as the old business saying goes. The same is true for your personal finances. Without setting goals and keeping a pulse on your money metrics, it’s hard to achieve any progress.

Forget the fancy financial jargon. Here are 15 numbers to help you monitor your fiscal health, along with why they matter and how to find them if you don’t already know them.

Income & Taxes

Far too many people conflate income with wealth.

I’ve known plenty of people earning six figures who are always broke because they spend every penny they earn. I also know teachers in their 30s earning $45,000 a year who have a net worth of $500,000.

Still, it takes income to build wealth. Income is the fuel your fiscal body needs to grow fit and strong. So it’s only natural we start at the beginning: with how much you earn.

1. Net Monthly Income

After taxes are taken out, how much do you earn in a given month? If you don’t know this figure, it’s impossible to create a budget that’s of any use.

In my own budgeting, I like to keep it simple and use four weeks’ after-tax income as my monthly income, rather than my annual after-tax income divided by 12. If you get paid weekly or biweekly, you can only count on four weeks’ income in any given month, not an abstract fraction.

Know your net monthly income, because this is your foundation to start building wealth.

2. Effective Tax Rate

Look over your last two years’ tax returns and run a simple calculation: What percentage of your gross income did you end up losing to federal, state, and local income taxes?

When you know your effective tax rate, you can start working to reduce it. You can contribute more to an IRA or Roth IRA, or a 401(k) or similar tax-deferred account. You could itemize your deductions if you have enough deductible expenses. You could even move to a state that doesn’t charge income taxes.

Lastly, compare the percentage of taxes withheld from your paycheck to your tax rate from the last two years. Are you overpaying? Underpaying?

If you’re underpaying, raise your withholding amount to avoid IRS penalties. If you’re overpaying, then you’re effectively lending money to the IRS for free. Reduce your withholding amount so you can invest that money throughout the year and earn a return on it.

Spending & Savings

No matter how much income you earn, your wealth depends on your ability to spend less than you earn. How much less will determine how wealthy you become.

3. Annual Irregular Expenses

Every year, you spend money on expenses that likely aren’t in your monthly budget. Costs such as holiday gifts, birthday gifts, wedding gifts, car repairs, and home repairs are ones you don’t incur every month, but which are inevitable.

Any expense you aren’t budgeting for is a problem. These “unexpected” expenses often end up coming out of savings rather than disposable income.

The solution to these budget-bleeding irregular expenses is simple: Budget for them! Pull all of your credit card and checking statements for the last year and calculate exactly how much you spent on irregular expenses. Keep in mind that you may have spent cash on some, so estimate those as well.

Once you’ve tallied up your total annual spending, you can then set a monthly budget for irregular expenses to regain control of it.

Pro tip: If you don’t currently have a budget set up for yourself, you can get started with YNAB.

4. Savings Rate

Arguably the most important number on this list, your savings rate is the percent of your income that you put towards savings and investments. The higher your savings rate, the faster you build wealth. It’s that simple.

But Americans are only saving around 3% of their paychecks on average, according to MarketWatch. That’s barely enough to keep pace with inflation, let alone build any real wealth. By contrast, members of the FIRE movement routinely save 40%, 50%, even 70% of their income. They do it so they can retire in 5 or 10 years rather than waiting 40 or 50 years.

Review your budget as a checkup and calculate your current savings rate. Then cut as many expenses as possible to raise it.

Debt & Credit

While debt isn’t inherently evil, it’s a tool that’s often misused. Knowing these numbers will help you keep a tight lid on your debt and minimize the potential risks of debt.

5. Debt-to-Income Ratio

Your debt-to-income ratio is a simple calculation: the percentage of your monthly gross income that goes to debt payments. For example, if you earn $4,000 per month, and your monthly debt payments add up to $1,000, your debt-to-income ratio is 25%.

Mortgage companies use this figure to qualify you for a loan. But you should trim this ratio down even if you aren’t shopping for a loan. Start by paying off your high-interest credit card debt pronto. Then look to pay down other high-interest debts, such as student loans, as quickly as possible, using strategies such as the debt snowball method.

If you have high-interest debt, consider using a personal loan from Credible to consolidate all your debts at a lower interest rate. The less money you’re losing to debt every month, the more money you can put toward building wealth.

6. Current Home LTV Ratio

When you take out a mortgage loan, the lender requires you to put down a certain percentage of the purchase price. The rest of the purchase price, the percent that they lend you, is known as the loan-to-value (LTV) ratio.

Over time, your LTV ratio will change as you pay down your mortgage balance and as your home (hopefully) appreciates. This matters because above an 80% LTV, conventional lenders typically require you to pay for private mortgage insurance (PMI), which can add hundreds of dollars to your monthly mortgage payment.

This fee does not help you in any way. It’s there solely to protect the lender against your default. In other words, it’s lost money.

When your loan balance drops below 80% of the market value of your home, you can often apply to have the PMI removed from your mortgage payment. With a phone call and a form submission, you can save thousands of dollars every year – but only if you know your current LTV ratio.

7. Credit Score

You don’t need to know your exact score. It fluctuates constantly, and there are three major credit bureaus, each with its own score. But you should know your approximate credit score.

You’re entitled to run your credit report for free once a year from each of the three credit bureaus. Once you know your score, you can take steps to improve your credit and help you qualify for less-expensive financing.

Your credit will determine how much house you can afford. A good credit score will help you borrow more but spend less, while a bad score will leave you paying high interest rates, high fees, and a higher down payment.

Pro tip: A great way to give your credit score a quick boost is to sign up for a free Experian Boost account. Experian will give you the chance to instantly increase your credit score by factoring in payment history for phone and utility bills.

Assets & Investments

With a higher savings rate, lower effective tax rates, and lower debts and expenses, you can build real wealth. But how is wealth measured? What numbers do you need to know as you start building and monitoring your wealth?

8. Net Worth

When people throw around the word “wealth,” net worth is usually what they mean. Your net worth is the grand sum of your assets and liabilities. Here’s how to calculate your net worth.

Check this number regularly or, better yet, set up automatic monitoring and reporting of your net worth using a platform like Mint, Personal Capital, or You Need a Budget. You can link your other financial accounts to these platforms, and they will provide you with real-time reporting and regular email updates on your net worth.

9. Cash Reserve Ratio (Emergency Fund)

Most personal finance experts agree that everyone needs an emergency fund. What they don’t agree on is how much you need.

An emergency fund, also known as a cash reserve or liquid reserve, is exactly what it sounds like: a certain amount of cash or other stable, easily liquidated assets set aside for emergencies. Rather than setting a specific dollar value to aim for, many personal finance experts recommend putting aside a certain number of months’ worth of expenses.

That’s where the “ratio” comes in. It tells you how many months of expenses you can cover with your cash reserve.

At the bare minimum, aim to have enough in your emergency fund to cover one or two months’ worth of expenses. Many experts recommend putting aside six months’ to a year’s worth of expenses, although for the young and fit, that may be overly conservative.

It’s up to you how much money you feel comfortable setting aside in cash. The key is that you set an emergency fund target and get to work meeting it.

Pro tip: Make sure your emergency fund is in a high-interest savings account – our favorite is a CIT Bank Savings Builder account. Not only will you have easy access to the money, but it will earn a little interest each month.

10. Current Asset Allocation

Asset allocation is a fancy way of describing what percentage of your money is invested in different types of assets. For example, you might have 10% of your money in cash, 70% in stocks, 10% in fine art you purchased through Masterworks, and 10% in bonds.

You can then further break down these broad umbrella categories. Among your stocks, what percentage are domestic versus international? Small-cap versus mid- or large-cap? Are they in the energy sector, technology sector, health care sector, or so forth?

If that all sounds complicated, fret not. You can keep your asset allocation strategy as simple or as detailed as you like. In the beginning, you could invest in an index fund that tracks the S&P 500 and leave it at that. As you learn more, you can dig into different sectors, geographic regions, and market caps. But you don’t have to.

Using a platform like Personal Capital that tracks your net worth will help you here as well. It will display your current asset allocation in a simple pie chart.

The reason you need to know your current asset allocation is simple: so that you can adjust it to fit your goals and targets.

11. Target Asset Allocation

Many investment advisors recommend that your asset allocation change as you age.

Conventional wisdom holds that as you get closer to retirement, your target asset allocation should shift toward lower-risk investments. That may mean moving some of your money out of stocks and into bonds, or selling higher-risk stocks in favor of lower-risk stocks.

Regardless of your age, you should set a target asset allocation as part of your investing strategy. As your various investments rise and fall, your asset allocation shifts. Once or twice a year, go into your brokerage account and rebalance your portfolio back to your target asset allocation.

This forces you to sell high and buy low as you move money from investments that have done well into investments that are currently lower-value.

Pro tip: If you use a robo-advisor like Betterment, it will automatically rebalance your portfolio throughout the year.


No matter how much you love your job, the day will come when you can no longer work. And for those of you who don’t love your job, well, the sooner you can say sayonara to it, the better.

Retirement is the ultimate long-term financial goal, and it takes most people decades to plan and execute. The sooner you want to retire, the better you need to plan.

12. Employer Retirement Contributions

Some of the numbers on this list require you to strategize, calculate, and plan. Not this one.

Ask your employer’s HR department a single question: “Do you offer matching retirement contributions, and if so, how much?” Many employers will match your contributions to the company’s 401(k) plan up to a certain percentage.

Make sure you take advantage of this effectively free money from your employer. It also doesn’t hurt that it pushes you to put more money aside for retirement, or that it’s tax-free.

Pro tip: Periodically, make sure your employer-sponsored 401(k) has you on the right track financially. You can sign up for a free 401(k) from Blooom, and they’ll check your asset allocation to make sure you’re properly diversified. Plus, they’ll check to see if you’re paying too much in investment fees.

13. Target Retirement Age

When do you want to retire?

This simple question will impact how much you need to save and invest for retirement. Spoiler alert: If you want to retire at 40, you need to invest more money than if you plan to retire at 70.

Start by setting a target retirement age, because your target nest egg depends in part on how long you expect to live on your retirement income.

14. Target Retirement Income

Similarly, if you want $200,000 of annual income in retirement, you need to invest more than if you want to retire with $40,000. A lot more.

If you’re following the 4% Rule (more on safe withdrawal rates momentarily), then for every dollar of income you want in retirement, you need to invest $25. That means that if you want $200,000 in annual income in retirement, you need a nest egg of $5 million. By contrast, if you want $40,000 in retirement income, you only need $1 million.

With that said, you may have income from other sources besides your nest egg. If you retire after 62, you can expect varying degrees of income from Social Security, for example.

15. Target Nest Egg

You know your current net worth. How much higher does it need to be for you to retire?

The answer depends on your target retirement age and income. Start with an understanding of safe withdrawal rates. The longer you want your nest egg to last, the lower the proportion that you can withdraw every year. In other words, the longer your expected retirement, the greater your nest egg must be relative to the income you want it to provide. It’s not exactly rocket science.

The 4% Rule is based on the assumption that you’ll live for 30 years after retiring. If you plan on retiring at 65 and living to 95, and you want $50,000 per year in income (not including Social Security income), then you can use the 4% Rule to calculate your target nest egg. Simply multiply $50,000 by 25 to reach a target of $1,250,000.

Depending on when you want to retire – and, therefore, how long you plan to live on your nest egg – you may be able to withdraw as much as 6% of your nest egg every year or as little as 3.5%. When coupled with your target retirement age and income, you can use safe withdrawal rates to quickly estimate how much you need to save for retirement.

Final Word

My mother always told me, “If you ignore your teeth, they’ll go away.” The same is true for your money.

The 15 figures above help clarify your financial past, present, and future so that you can track your progress, set achievable goals, and execute on reaching them. The better your grip on these financial numbers, the better the odds that you’ll reach your goals.

G. Brian Davis is a real estate investor, personal finance writer, and travel addict mildly obsessed with FIRE. He spends nine months of the year in Abu Dhabi, and splits the rest of the year between his hometown of Baltimore and traveling the world.