4 Ways to Measure Your Financial Health

When we think about physical fitness, we often picture exercise or healthy eating. Financial fitness works much the same way. Much like how we care for our physical health, being in good financial shape isn’t about perfection—it's about building and practicing smart habits to support your long-term well-being.

With that in mind, a great place to start evaluating your financial fitness is to take stock of  where you are today and set goals for the future. Then take small, consistent actions to become stronger over time.  Ready to get moving? Take a look at the following indicators for your financial wellness and read on for tips to improve.

Understand your debit-to-income ratio 

There’s nothing wrong with debt as long as you manage it well. Start with having a good understanding of how much you owe. One helpful measure to understand how your debt may be impacting your finances is your debt-to-income ratio (DTI), which compares your monthly debt payments with your gross monthly income. Lower DTI ratios generally provide you with more financial flexibility and a better ability to qualify for future financing at the best rates. For general financial health, the most respected sources point to keeping your ratio at or below 36%, and ideally below 30% if you want maximum financial flexibility and borrowing power.

Know what you’re spending on housing

Housing is often your largest monthly expense. If too much of your income goes toward housing, it can be difficult to save for emergencies, retirement or other financial goals. Housing costs typically include mortgage principal and interest, property taxes, homeowners insurance and HOA dues (if applicable). When evaluating financial health (rather than what a lender might approve), housing costs that are 25%-28% of gross income or less are generally considered to be a very healthy range.

Build a healthy emergency fund

Unexpected expenses happen and it’s not a matter of if, but when. Whether it's a home repair or medical bill, having emergency savings helps reduce financial stress, prevents additional borrowing and keeps your goals from getting derailed. Even setting aside a small amount from each paycheck (or as you are able) creates a meaningful cushion over time. According to a widely accepted guideline, a healthy emergency fund should cover three to six months of essential living expenses. And if you’re a homeowner, you should increase that to six months of essential expenses in a liquid emergency fund. 

Understand your spending habits

What you earn is just the beginning when it comes to your financial health. What you spend provides the best lens on how you’re doing and where you can adjust. Take an honest look at your monthly expenses. Are there places you can trim expenses? If so, redirect those savings to help build your emergency fund or long-term savings. 

For example, one common budget drain is subscription creep, where recurring charges quietly accumulate over time. According to CNET, U.S. adults spend more than $1,300 annually on subscriptions, including an average of more than $250 each year on services they no longer use.

Six simple ways to improve your financial fitness 

• Review your checking account and credit card statements to ensure you know exactly how much you are earning and spending. 
• Check for automatic payments that can be reduced or canceled, especially subscriptions (streaming services, apps, etc.) you no longer use. 
• Increase your monthly savings contribution, even by a small amount. Set up automatic transfers each month. Experts agree that’s the fastest way to make progress.
• Review your credit card balances and identify opportunities to pay down high-interest debt. To learn more about the most popular strategies, read our blog Paying Off Debt: What’s the Best Strategy?
• Choose one realistic financial goal for the next 30 days and take the first step toward it. For example, set up an automatic transfer per paycheck to your emergency fund or pay extra toward a credit card balance.
• Don’t “set it and forget it.” Your income and expenses fluctuate over time. Remember to revisit this list regularly and make adjustments to ensure your budget continues to support your priorities, especially after a pay raise or taking on sizeable debt. 

Small steps lead to lasting progress

Remember, financial fitness isn't about perfection. You will make mistakes but just keep going and commit to making thoughtful decisions that move you closer to your goals. Check on your progress regularly and make small adjustments along the way to stay the course toward long-term financial well-being. Just like improving your physical fitness, your financial fitness will improve over time when you can be consistent with your habits. 

If you're looking for guidance, talk with one of our bankers who can help you identify practical opportunities to strengthen your financial future, one step at a time.