Your answers to these questions will determine if they are!
How much debt do you have?
Do you have an emergency fund in place?
How much disposable income do you have?
Are you well insured?
Are you planning for the future?
How much debt do you have?
Consumer debt including credit cards and personal loans can be useful tools for managing your finances. However consumer debt costs money and the costs can spiral out of control if not managed properly and paid off in a timely fashion.
If your personal debt is under control, then it’s a great sign that your finances are heading in the right direction.
Do you have an emergency fund?
Having an emergency fund or a rainy day fund of between 3 and 6 months of your current income is a great idea to protect you from unexpected costs.
How much disposable income do you have?
Disposable income is a key measure when it comes to your finances. Budgeting can free up income to do other things and can help you absorb unexpected costs.
A good rule of thumb is that 50% of your net income should go towards living expenses and essentials (needs), 20% of your net income should go towards debt reduction and savings, and 30% of your net income should go towards discretionary spending (wants).
Are you well insured?
Being well insured will give you peace of mind for you and your family should the unexpected happen. This includes life cover which protects your family should you die prematurely. Serious illness or critical illness cover pays a lump sum should you be diagnosed with a serious illness, private health insurance which covers hospital stays, consultants fees and day to day hospital expenses amongst other things. Last and certainly not least is Income Protection which protects the asset that pays for everything else...your Income. Having these insurance products is a great sign that your finances are headed in the right direction
Are you planning for the future?
Have you a pension fund in place? (Private or state) This combined with an emergency fund is a great way of preparing for your financial future. If you have income in excess of what you need on a month to month basis, investing your funds is an option you might like to explore.
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