How to Determine My Financial Health With a Calculator

Use a hand calculator or an online calculator to figure your financial health.

Your overall financial health is basically determined by your personal net worth. The basic formula for personal net worth is your total assets minus your total liabilities. By calculating your personal net worth, you can find out how balanced your debt-to-income ratio is. You never want to have more debt than you can reasonably afford with your income. If after you calculate your net worth, you come up with a positive number, you're doing well and have good financial health. However, if you come up with a negative number, you're carrying too much debt for your income level, and that means you have poor financial health.

Instructions

Using a Hand Calculator

1. Add your total assets. Your assets include anything you have monetary equity in. Examples include: houses, cars, jewelry, investments, cash, bank accounts, personal possessions and anything else of value.

2. Add your total liabilities. Your liabilities include anything you owe money on. Examples include: mortgages, auto loans, personal loans, student loans, credit cards, lines of credit, and anything else you still owe money on.

3. Enter the figure you came up with for your total assets and enter it into your calculator.

4. Press the minus button.

5. Enter the figure you came up with for your total liabilities and enter it into your calculator.

6. Click "Enter" or "=" depending on your calculator. The resulting number is your net worth. If it's a positive number, you are financially healthy. If it's a negative number, you are not financially healthy.

Using an Online Calculator

1. Go to the CNN Money website to use its financial health calculator (see Resource).

2. Enter your age and gross annual income. Click "Go."

3. Enter your monthly housing payment and click "Enter." Click "Next."

4. Enter your monthly debt and click "Enter." Click "Next."

5. Enter how many months worth of living expenses you have saved and click "Enter." Click "Next."

6. Enter the percentage of your portfolio you have invested in the stock market and click "Enter." Click "Next."

7. Enter the percentage of your portfolio invested in your employer's stock and click "Enter." Click "Next."

8. Enter the death benefit amount of your life insurance and click "Enter." Click "Next."

9. Enter how much you're currently saving for retirement each month and also the total amount you have saved up in retirement thus far and click "Enter." Click "Next."

10. Click "Done. Give me my grade!" You'll now receive a financial health grade based on your answers. The areas that need improvement will be shown in red and the areas where you're doing well are shown in blue.

References

• Rediff Business: How to Calculate Your Financial Health

Resources

• CNN Money: How Healthy Are Your Finances?