Think of your financial health like your personal health: just as you track numbers like weight and blood pressure to gauge your physical wellness, there are a few key financial numbers that can help you stay on track financially. Here’s a breakdown of nine essential figures to monitor to give yourself a quick financial check-up. Tracking these can help you feel more empowered, make more informed choices, and maintain peace of mind.
Your after-tax income is the money that actually lands in your pocket after federal, state, and local taxes are taken out. It’s the starting point for understanding your spending power and plays a central role in budgeting. By calculating your hourly after-tax income, you can better assess how much time you’re trading for each purchase—giving you a fresh perspective on spending. If something costs $100 and you make $20 an hour after taxes, you’re trading five hours of work to afford it.
Knowing your after-tax income also helps you set up a 50/30/20 budget. This approach suggests:
If a new expense pushes your must-haves above 50%, it may be a sign that the purchase could strain your finances. Setting limits helps create a buffer for job loss or other financial setbacks.
Your Social Security statement is a great place to start assessing your lifetime earnings. Combine that with any additional income sources, such as investments, inheritances, or gifts, to see a full picture of the funds that have come into your hands over time.
Once you have a total, take a snapshot of your net worth by subtracting your debts (credit cards, loans, mortgages) from your assets (home equity, savings, retirement accounts). This exercise isn’t about assigning a “pass or fail” to your finances but about understanding what you’ve accomplished with the resources you’ve had. It can help you determine if you’re comfortable with your savings or if there are areas where you’d like to improve.
Knowing your full retirement age is critical for planning. Your full retirement age is the age at which you’re entitled to 100% of your Social Security benefits. Claiming benefits before this age means accepting a permanent reduction in your monthly checks while delaying up to age 70 boosts your benefits by roughly 8% per year.
If you’re born after 1960, the full retirement age is 67. To get an idea of your expected benefits, check your Social Security statement. While Social Security has funding challenges, it’s expected to cover a significant portion of benefits even in the coming decades. Understanding your expected Social Security benefit can help estimate how much additional income you may need for retirement.
Your retirement savings rate—what portion of your income you’re setting aside for retirement—is a powerful number to track. Aim to increase this rate as much as possible over time. A retirement calculator can help determine if your current rate is likely to meet your retirement goals. If there’s a gap, you can make adjustments to try to close it, either by increasing your savings rate, adjusting your retirement age, or rethinking your retirement lifestyle. Every little boost in your savings rate can have a big impact over time.
Your credit score is a key number that impacts your borrowing power and the interest rates you’ll pay on loans. Good credit not only opens doors to better loan terms, but it can also reduce costs in other areas, such as insurance premiums. Regularly monitoring your score can help you track progress, spot issues, and protect yourself from identity theft. While there are many factors in a credit score, focusing on making timely payments and keeping credit utilization low are two of the most effective ways to improve it.
Your debt-to-income (DTI) ratio, which measures monthly debt as a percentage of monthly income, is a common measure used by lenders. Calculate your DTI by adding up all monthly debt payments (including rent or mortgage) and dividing by your monthly income. Generally, a DTI below 36% is considered healthy, while a DTI above 50% may make it harder to qualify for loans. Keeping your DTI ratio in check will make it easier to access credit if you need it and can reduce stress, knowing you’re living within your means.
An emergency fund acts as a financial buffer for the unexpected. Aim to save at least three to six months’ worth of essential expenses in a liquid, easily accessible account. This fund protects you from needing to rely on high-interest debt if an emergency occurs, like a medical expense or job loss. Building up an emergency fund may take time, but even a small fund offers peace of mind.
Your monthly savings rate is another vital number to track—it tells you what percentage of your income you’re setting aside each month for future needs, whether for retirement, an emergency fund, or other goals. Ideally, your monthly savings rate will include contributions toward short-term, medium-term, and long-term financial goals.
Even if you’re only able to save a little each month, consistent contributions add up over time, helping you build a financial cushion and reinforcing a positive savings habit.
Your financial independence number represents the amount you need in savings and investments to sustain your current lifestyle without needing to work. To calculate this, consider your annual expenses and determine how much in savings or investments would be necessary to cover them indefinitely. Many people use a 4% withdrawal rate to estimate this number (annual expenses divided by 0.04). Understanding this figure can be empowering, as it gives you a concrete target for financial security.
Knowing these nine numbers gives you a clearer picture of your financial health. Regularly checking these figures and adjusting as needed will help you make informed decisions, build resilience, and plan for the future with confidence. Whether you’re just beginning to track these numbers or have been monitoring them for a while, taking control of your financial well-being starts with awareness—and every small step makes a big difference over time.