Savings: The Cornerstone of Financial Health

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In America, it has been ingrained in our financial psyche that our credit score is an important indicator of a healthy financial outlook. The truth is, your credit score is only an indication of your ability to engage in the behaviors that benefit your bank. For instance, the more you use credit and pay the bank, the more your credit score goes up. However, your ability to save and pay yourself isn’t even considered.

If you have money in the bank, you can pay for unexpected expenses, buy the things you want and  earn interest instead of your bank earning it in your place. So how do you know if you have a healthy financial situation? Here are some good indicators:

  1. You have more savings than credit card debt.
  2. You have a set amount every month that you save.
  3. You earn more interest than you pay every year.
  4. You have enough money saved to weather a loss of income for a period of time (you should save up for at least two months of lost income) and have enough money saved to manage life if you have a serious medical issue.
  5. You have money saved for unexpected repairs.
  6. You’re maxing out your retirement savings.

If you can check off those six items, your financial situation is healthy and it’s not likely you will need a Debt Doctor anytime soon. But if you can’t check them off and credit cards, a failed business or overspending on your house is keep you from saving, give us a call and we can develop strategies to reduce expenses and start saving today. Stop paying your bank and start paying yourself.

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