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Financial Health

Reviewed by Apoorva | Updated on Aug 16, 2023



Financial health describes the state of a person's personal financial situation. Its dimensions include savings, retirement planning, and the income spent on fixed or non-discretionary expenses.

What is Financial Health?

Though financial experts have designed guidelines for each indicator of financial health, the situation differs with each individual. It is recommended that each individual develops his own financial plan to ensure that his life goals are achieved.

Determining Financial Health

  1. Savings and overall net worth sum up to state the money at their disposal for current or future use.

  2. Debt, such as credit cards, mortgages, and student loans, affect the money at hand for future use.

  3. Financial health is not static and varies based on an individual's liquidity and assets.

  4. Fluctuation in the price of goods and services also affects the financial health.

  5. Strong financial health can be proclaimed with a steady flow of income, rare variation in expenses, definitive returns on investments, and a growing cash balance.

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