3 Ways to Evaluate Personal Finances

[Suba]

Even though evaluating personal finances during 2022 doesn't have to be at the beginning of 2023, it can be done at any time, you can also evaluate personal finances monthly, quarterly or per semester.

However, because in general at the beginning of the year many people make new financial plans and goals, so last year's financial evaluation was carried out at the beginning of the year after closing the books.

Personal financial evaluation aims to be able to show a person's financial health status, which can be grouped into 4 categories namely Unhealthy, Healthy, Independent and Prosperous

Here are 3 ways of evaluating personal finances that are often used by experts, including:

1. Financial Commitment
Financial commitment means measuring your level of adherence to financial plans and goals. consisting of monthly expenses, routine bills, debt repayments. After that, calculate the monthly or annual cashflow. Next, you can compare cash flow with the spending budget that you have created, whether it is profitable or unprofitable. Then you can conclude that healthy finances will be marked by a positive cash flow value and vice versa. Meanwhile, to compare the expenditure budget with real expenditure, then if for example expenses for entertainment costs are greater than the budget, it is Unprofitable. And for the next month you can minimize entertainment costs.

2. Debt Payment Installments
Make sure the debt payment installments are no more than 30% of your total income. This is a feature or sign that your finances are healthy or unhealthy. How to calculate debt payment installments in percentage (ratio) is also very easy, you only need to add up all debt payment installments divided by your total income and multiplied by 100%. If your debt installments exceed the ideal limit (30%), it's a good idea to immediately pay off debts that are approaching maturity, so that you can make your finances healthy.

3. Saving
The independent financial category is above the healthy financial level, which can be measured or evaluated by the amount of your savings increasing or not every month. One of the characteristics of independent personal finance is if a person is able to save at least 10% of his total income every month.

4. Investment
Financial management skills for investing will show someone has reached the financially prosperous category. and the best way to invest is to use the dollar cost averaging strategy.

 

[Yusra3]

Evaluating personal finances can be a difficult task, especially for those who are just starting out. The key to making sure you're getting the most from your money, though, is knowing how to evaluate your personal finances.

Here are three ways you can evaluate your personal finances:

1. Do you have a budget? If not, create one! This will help you keep track of all of your spending and make sure that you don't go over budgeted amounts. It's also useful for tracking down where all of your money goes so that you can figure out where to cut back or increase spending on certain things.

2. Are there any unexpected expenses that come up? If so, do they exceed your savings account? Are they enough to cause a problem down the line? These are important questions to consider when evaluating personal finances because they'll help you determine if any changes need to be made right away or if it's best for now just to wait until the situation resolves itself naturally (and without any intervention from anyone else).

3. Understand Your Credit Score. One thing that can really help people understand their personal finances is understanding their credit score and how it relates to their ability (or lack thereof) to borrow money from lenders like banks or credit card companies.