Home > 2016 > Personal Finance

The 5 Most Important Numbers in Your Financial Life

Advertiser Disclosure Comments 1 Comment

There are a lot of numbers in finances, so it’s understandable that some of us get confused from time to time. That said, there are some numbers that are essential when it comes to understanding our overall financial health. To help you get a better handle on the state of your finances, here are the five numbers you should know.

1. How Much Money You Have Coming In

This might seem like a no-brainer, but you would be surprised how many people don’t know how much money they bring home every month. Most folks might be able to rattle off their salary pretty easily, but their net and gross income don’t come to mind as quickly.

Having an accurate count of how much money you bring in every paycheck is vital to building and maintaining a good budget. So if you find yourself struggling to recall your income, you may want to consider taking a closer look at your next pay stub. There you’ll be able to see how much you make (before and after taxes) and how much you may be contributing towards a pension or retirement account.

2. How Much Money You Have Going Out

Knowing your expenses is vital when trying to maintain financial wellness. If you’re unsure how much you money you spend each month, consider tracking your purchases for four weeks. Not only will this let you discover how much money is leaving your wallet, but it will also let you see where it’s going. This could help you determine whether you’re overspending in certain areas of your life, find new ways to save and better optimize your budget to achieve your goals.

3. How Much Money You Owe

Your debt-to-income ratio is a great way to understand how much debt you’ve taken on and whether or not it’s in a manageable state. If you’re unsure of your debt-to-income ration, you can start by pulling up your most recent credit report, ideally one from all three bureaus, just in case there’s a minor discrepancy. (You can get your free annual credit reports from AnnualCreditReport.com and you can view your free credit scores each month on Credit.com.)

From there, you can tally up your monthly debt payments and divide that by your monthly income (gross; before taxes and other deductions). The lower the number, the better off you are. (For best credit scoring results, you generally want to keep the amount of debt you owe below at least 30% and ideally 10% of you available credit.)

4. Your Net Worth

Your net worth is essentially the difference between how much you own and how much you owe. What you own includes your bank accounts, investments and property like houses and cars. What you owe is essentially the sum total of all your debts. Your net worth can provide you with a general overview of your financial situation. If your number is positive, you’re in good shape! If your number is negative, it might be time to take a look at your finances and see if there’s a problem you need to fix.

5. How Much You Have Saved

Do you know how close you are to saving up for your current financial goal? Tracking your savings is a great way to make sure you continually contribute and can even help motivate you when times get tough! If you’re unsure how much you have saved for retirement, an emergency fund, or any other savings goal, you can consider constructing some sort of visual to help you keep track.

While it can be challenging to keep track of your finances, you’ll be better of in the long run for putting in the time and effort. Providing you’re able to stay on top of these five numbers, you should be in solid financial shape.

More Money-Saving Reads:

Image: DigitalVision

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • BIK

    Which is why I use Quicken to keep track of everything (income and expenses). I have no doubts about where the money is coming from or going to.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team