When we go to the doctor, there are a few things that are almost guaranteed to happen. A fairly long stay in the waiting room, and dates with a thermometer, stethoscope and blood pressure cuff. Except for the time in the waiting room, these are instruments to measure your vital signs, which are the physician’s rudimentary road map to your overall health.
The Vital Signs of Your Financial Health
Your financial health has vital signs as well. Gildshire wanted to learn about financial vital signs. We found out that they weren’t that much different from the physical signs.
Credit Score = Thermometer, Except in Reverse: The higher your FICO (that’s your credit score), the healthier you are for right now. If it is low, you are financially ill. But you don’t have to stay that way. Take the necessary steps (a credit card that you pay off every month. Responsible use of the credit you have, etc.) to raise the score. Know that your temperature will improve with time, as long as you behave. It doesn’t take a million dollars from Uncle Louie to improve your score. Be both patient and prudent and your temperature will soon be 98.6 degrees.
Retirement Savings = Heartbeat: Gildshire believes that you are going to live to a ripe old age. The only sure way for that to happen is if your heart is healthy for the long haul to great-great-grandchildren. There is no single, correct dollar amount to put aside for retirement, which is why most projections rely on percentages. Experts say 15% is just about the right number. But don’t panic. Just get used to the idea of regularly saving. If five or six percent is all you can do this month, start there. 15% is a target. Eventually, you will make it. Don’t forget about company matching funds. You may be able to save more than 20% with the match.
Emergency Savings = Blood Pressure, Except in Reverse: The use of a blood pressure cuff is the quickest way to tell if you are in a crisis hidden from the naked eye. Speaking of crises, how long could you survive on your emergency savings? There is no need to be embarrassed. According to a recent study, the median answer Americans gave when surveyed was “17 days.” Experts tell us that a couple without children should have six months’ income stashed away in a fund NOT earmarked for retirement. A family of four should have 12 months income put aside. Chances are your blood pressure is too high.
Financial fitness involves a nutrition pyramid of planning. About 50% of your income going toward fixed expenses like rent and utilities, 20% for financial goals like savings, and 30% for day-to-day expenses like groceries and gas. Everyone’s fitness could use some tuning. Gildshire will be here to help along the way.