4 questions to ask about your financial health

4 questions to ask about your financial health

Financial health is a huge factor in the quality of our lives, yet it’s overlooked in many of the ways we evaluate wellness. Your financial wellness informs your physical and mental health. And it’s not a stretch to see how a bad credit score or unpaid loan could impact how you feel stress — and how you formulate a sense of self-worth.

Despite its importance, money can be difficult to talk about. Many people feel shame or isolation when they struggle financially, which can make it harder to step back and evaluate their situation.

Experts at Accredited Debt Relief say if you want to understand your financial health, start by asking yourself these questions.

1. Can I afford an emergency?

No one ever plans to crash their car, lose their job or drop everything to care for a loved one. But people with healthy finances have a plan for when catastrophe strikes: an emergency fund.

If you think an emergency could put you into immediate financial hardship, you might want to step back and assess your spending. Financial health experts often say that building an emergency fund should be the highest priority, even before other savings.

2. Am I making progress towards my financial goals?

It doesn’t matter if you earn $10,000 or $1 million per year, you probably have aspirations to travel, buy a home or save for retirement.

One reliable indicator of your personal financial wellness is your progress towards those financial goals. If you’re putting money into savings — no matter how small the amount — it’s a sign that you’re able to provide for yourself beyond your immediate needs.

3. Do I have a choice in how I manage my money?

Sometimes, we believe that we have more choices for how we conduct our lives than we actually do.

This is especially true when it comes to our financial options. From the cost of living to the type of bank in your neighborhood, external factors impact your options for money management.

Taking your personal circumstances into account, consider your options for things like loans, credit cards and other banking services. If your budget, debt or credit score impacts your ability to access these opportunities, then your financial health may be more compromised than at first glance.

Financially healthy people are able to choose the institutions, credit cards, loans and programs they want to work with, while those lacking options can get stuck with expensive or subpar services. But the good news is that healthy habits can help you maintain stability — and improve the options available to you.

4. Do I feel in control of my finances?

Especially for those digging their way out of debt, a sense of control can feel unattainable. The inability to save, afford monthly payments or qualify for loans can undercut your motivation, too. Feeling out of control may also be a clue that your spending habits, relationships and career need attention — and, potentially, change.

But if you feel pressured, trapped or resigned to your financial situation, there’s hope for you. By simply completing this assessment, you’ve begun to rethink your finances. And the best part? You don’t have to start your journey alone.

How do you define financial health?

The definition of financial health is two-pronged: It’s both your ability to work towards your financial goals and your capacity to overcome money problems.

Consider how two people might respond to the same unexpected expense, like a major car repair. One person has emergency savings and can cover the cost while adjusting their budget. The other relies on credit and may need to take on more debt to handle the bill.

Person 1 is upset about the situation, but not stressed: They’ve put money into a rainy day fund for situations just like this.

Person 2 feels upset and deeply stressed by this unexpected bill: They have not been putting their money away into savings, rely on credit to get by and do not have plans for their finances beyond their next paycheck.

Financial health doesn’t mean avoiding every setback. Instead, it’s about whether you have the stability, habits and resources to recover from financial challenges while continuing to work toward your goals.

This story was produced by Accredited Debt Relief and reviewed and distributed by Stacker.