Knowing the answers to these questions will give you a clearer view of the state of your financial health and help you get on track. If you can’t answer them now, be sure to take a closer look at your finances and make sure to keep them in mind for the future.
Are you spending more than you earn?
We’ve all been guilty of it at some point but if you’re regularly spending more than you’re bringing in, you’re probably cranking up your debt and not putting any savings aside. If this sounds like a familiar scenario, it’s time to turn things around by working out your debt-to-income ratio.
There are helpful tools like the Mint app, which gives you a complete picture of your income, spending and saving habits.
Are you on top of your debt?
Most of us rely on our credit cards at some point because we just don’t have the cash when we most need it.
That’s okay if you’re keeping on top of your repayments and paying off the full amount owing. But if you’re not sure how much debt you’re in and you’re paying interest every month on your credit cards, you’re at risk of debt shock.
Check the amount you owe on your cards, contact your financial provider, and work out a payment plan to pay it off.
Could you handle an unexpected big expense?
Life events happen when we least expect them so having an emergency fund is an important safety net.
We’ve all been there: the car breaks down, we get sick or need expensive dental work, or find ourselves in between jobs. When the proverbial hits the fan, you’ll want to be prepared.
You might not be able to put aside more than $10 to $20 each pay into your emergency funds savings account but it will add up over time and be there should you need it.
What’s your mortgage interest rate?
If you can’t answer this one, you’re not alone. Many people don’t pay attention to interest rates when it comes to their homes, but this can add up to a lot of cash. Your home loan interest rate will affect how quickly you can pay off your home and save you a significant amount of money in the long-term, so contact your bank to find out what your interest rate is and inquire about having it lowered.
This article originally appeared on our sister site, Now to Love.