What qualifies a person as one who is “financially healthy?” Good credit and six months of emergency savings maybe? A financially healthy person probably earns enough of a salary to easily cover all of his or her bills and expenses, and also has enough left over for discretionary expenses. But what about retirement savings, auto loans, and home equity?
With so many elements that go into an individual’s personal finances, determining the degree to which a person is “financially healthy” can be a difficult task. Investopedia defines financial health as “a term used to describe the state of one’s personal financial situation.” The financial site goes on to explain “there are many dimensions to financial health, including the amount of savings you have, how much you are setting away for retirement, and how much of your income you are spending on fixed or non-discretionary expenses.”
At the end of the day, your financial health is primarily determined by you. How comfortable are you with meeting your financial obligations? How confident are you in your savings, retirement savings, and your financial future overall?
Bankrate just released its August Financial Security Index Charts. Each month, Bankrate takes a monthly survey to determine how Americans feel about their personal finances when compared to 12 months ago. The results of the survey show consumers in certain demographic categories seem to have more indicators of good financial health, like a retirement savings plan and also higher levels of comfort with their financial situations. Consumers with signs of poor financial health also appear to have some common characteristics. Is there a possible correlation between some of these demographic factors — many of which are out of our control — and financial health?