8 Critical Personal Finance Numbers You Need to Know

Critical Personal Finance Numbers You Need to Know

It’s important to be able to accept the things you did know, didn’t know, or ignored that have impacted your current financial situation. Only then can you build an effective financial plan. Here are 8 critical personal finance numbers you need to know.

1. After-Tax Income

The first critical personal finance number you need to know is your after-tax income. This means you must know what money you’re actually putting in your pocket every month (net) as opposed to your overall income (gross).

2. Monthly Expenses

Once you know how much money you have coming in you need to determine how much money you have going out. You also need to make sure you’re covering all your necessities and not overspending for non-essentials.

3. Debt – Total and for Each Loan

Yet another critical personal finance number you need to know is your debt. Furthermore, you need to know both your total debt and the balance for each loan.You may also investigate refinancing or consolidation depending on the situation.

4. Savings and Savings Rate

While it’s extremely important to know your debt situation, it’s equally important to understand your savings and savings rate. Many people ignore savings altogether, preferring to put it off until they’re older, make more money, or have less debt.

5. Interest Rates (for Debt and for Savings)

For debts, it’s important to know your interest rate so you can make informed decisions about whether you should pay loans off on schedule or ahead of schedule. Just because your money isn’t invested doesn’t mean you shouldn’t get the best return possible.

6. Credit Score

Your credit score is a number ranging from 300 to 850 that represents your creditworthiness. In other words, your credit score is a representation of how responsible you are with credit and is used by lenders to assess the level of risk associated with extending you new credit.

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