Financial Fitness: Quick and Easy Calculations for a Healthier Wallet
Feeling a bit lost in the world of finance? Don't worry; we've got you covered. With a few simple calculations, you can get a better handle on your money and start making smarter decisions.
Here are some quick and easy ways to check your financial health:
Debt-to-Income Ratio
What is it? This shows how much of your income goes towards paying off debt.
How to calculate: Divide your total monthly debt payments by your gross monthly income.Savings Rate
What is it? This tells you how much of your income you're setting aside for the future.
How to calculate: Divide your monthly savings by your gross monthly income.Emergency Fund Ratio
What is it? This shows how much you have saved to cover unexpected expenses.
How to calculate: Divide your emergency fund balance by your monthly expenses.Net Worth
What is it? This is the difference between what you own and what you owe.
How to calculate: Subtract your total debts from your total assets.Return on Investment (ROI)
What is it? This measures how much you've earned on an investment.
How to calculate: Divide your net profit from an investment by your initial investment.Compound Annual Growth Rate (CAGR)
What is it? This calculates the average annual growth rate of an investment over time.
How to calculate: There are online calculators or financial software that can do this for you.
Remember, these are just a few basics. There are many other calculations that can help you manage your finances more effectively. By understanding these key metrics, you can make informed decisions and work towards your financial goals.