How to Check Your Financial Condition

How to Check Financial Condition – Checking your financial condition from time to time is important to maintain your financial health. Because, even though you have been meticulous and careful in managing your finances, as a human being, of course you can make mistakes.

The term commonly used in this case is Financial Check-up. Doing a Financial Check-up is checking your financial condition, starting from looking at your total finances and debts as well as income and expenses. Thus, you will have an idea of how your financial condition will be in a certain period of time.

Therefore, it never hurts to check your financial condition from time to time. As the name implies, Financial Check-ups have the same role as Medical Check-ups, to ensure that your financial condition remains healthy and stable. So, how do you check your financial condition?

When Should You Check Your Financial Condition?

how to check financial condition

The awareness of the Indonesian people to check their financial condition is still relatively low. Instead, start by checking it at least once every 3 months or 4 times a year. Thus, you can assess your financial condition and allocate funds for your needs that can be considered more important.

In addition, by checking your financial condition like this, your financial problems will not last too long because you can find out and solve them as quickly as possible.

However, outside of these 3 months, there are several other times that require you to check your financial condition. Such as during the marriage process, salary increase, disaster, recession, or when experiencing termination of employment (PHK).

These things can affect your financial condition. By checking your financial condition, you can mitigate and make adjustments until your financial condition is stable again.

What is Needed to Check Financial Condition?

In checking your financial condition, you will need some data that is relevant to your finances. Starting from the amount of income, assets owned, total debt, large expenses.

Total Income

The amount of your income each month is important data to have because this is your starting point for checking your financial condition. The data you need includes the amount of salary or the results of your business income, and other income such as holiday allowances (THR)

Assets Owned

Owned assets such as houses, vehicles, investments, and others must also be included in the examination of financial condition. The total amount of these assets is important to know to be a factor in your calculations in checking financial conditions.

Total Debt

The data needed for other financial health checks is the amount of debt you have. This is important because debt is an obligation that must be returned, of course fulfilling this obligation you will deduct some of your income. Debts such as KPR (House Ownership Loans), KTA (Unsecured Loans), credit cards, and other debts outside banking, such as loans to relatives, friends, and others must still be taken into account.

Expenditure Amount

This data should be held in as much detail as possible. Starting from shopping every month, electricity bills, internet, your school, and so on must be taken into account. By calculating the amount of expenses, you can check whether there are non-essential expenses and keep your financial condition healthy and stable.

Read also: What is a Financial Application? Here are the Benefits!

How to Check Your Financial Condition

how to check financial condition

After obtaining important data in checking your financial condition, of course you are required to perform calculations and process the data.

Consumer debt ratio

First, is the ratio of consumer debt. This ratio is all forms of loans (debt) that appear in your finances that are consumptive and do not generate money. Like, credit card bills, the installments you have every month, and so on.

Calculating this ratio is used to compare the total value of your consumer debt with the total value of your fixed income per month. So, the calculation is the total consumer debt divided by the total monthly income.

Installment ratio

Next is the installment ratio. In this ratio, you will calculate the ratio between the total monthly installments and the total fixed income each month. These installments include house installments (KPR), personal vehicle installments (KKB), and others. Preferably, this installment amount is a maximum of 30% of your total monthly fixed income.

Emergency fund ratio

Lastly is the emergency fund ratio. This ratio will calculate the ratio between the amount of your current assets and the amount of your monthly fixed costs. Current assets are assets that are easily liquidated such as cash, deposits, savings, and gold. Meanwhile, monthly fixed costs are the amount of fixed expenses you need for each month. These costs include, electricity bills, and children's education costs.

Checking your financial condition regularly will help keep your finances healthy and stable. Not only do you need a Medical Check-up, your finances also need a Financial Check-up. Therefore, do not forget to do it at least 4 times a year.

If you are having trouble managing your financial condition to stay healthy, Whiz has many features that can help you