8 Money Numbers You Need to Know

Do you know your financial status, or what that even means?

According to a Gallup poll, only 32% of Americans have a household budget. Maybe you feel like your financial situation won't improve, but you can guarantee it won't improve if you don't know where you stand or ignore it. So today, we're going to talk about eight money numbers you need to know so you can plan your path through life. Like any journey, you need to know your destination as well as your starting point.

One place I'd like to start real fast is to tell you to like and subscribe for more useful tips like the ones in this episode. We'd really appreciate it!

It's important to be able to accept the things you did know, didn't know, or ignored that have impacted your current financial situation. If you haven't started your plan, the best time is always now.

Here are eight critical personal finance numbers you need to know, no matter where you are on your financial journey:

1. After-tax income: This is what you're actually taking home after taxes, compared to your overall income (gross). Some of you might be thinking, "After taxes and everything, my take-home looks pretty gross!" If you're on a salary, simply look at your paycheck to see what you're taking home every month. After-tax income will be a little harder for those with variable income, but estimations can still be made. Knowing how much money you actually have to allocate is the first step in taking control.

2. Monthly expenses: Once you know how much money you have coming in, you need to determine how much is going out. You also need to make sure you're covering your necessities and not overspending on non-essentials. Making a budget is a simple way to track what and where you're spending each month. Even with good cash flow, you need to have a good idea of your spending to maintain your finances. 

Fact: 33% of those making $50,000 to $100,000 live paycheck to paycheck, and 25% of those making $150,000 are in the same predicament.

3. Debt: Your debt is what you owe overall. Knowing the balance in terms for each loan will help you make informed decisions about what you should target first for extra debt repayment. Make a plan to get out of debt as soon as possible, and always consider refinancing or consolidation.

4. Savings and savings rate: While it's extremely important to know your debt situation, it's equally important to understand your savings and savings rate. Many people ignore saving altogether, preferring to put it off until they're older, make more money, or have less debt. Big mistake! Savings for retirement need to happen in whatever amount and capacity you can manage right now. Your savings rate refers to how much of your take-home pay you're saving or investing. Recommended savings rates generally range from 10% to 20%, but you should aim to start wherever you can and then increase your savings rate annually.

5. Interest rates (debts): You need to know your interest rate to make informed decisions about paying off loans on or ahead of schedule. Let's say you have a car loan at four percent and a credit card at twenty percent. In this situation, the credit card has a very high interest rate, so focus on paying that debt down first because it's costing you five times the rate of the car loan. While you're aware of interest rates on debt, you should also know the interest rates for savings.

6. Interest rates (savings): While it's a good idea to have some savings readily available, consider moving those funds to higher-yielding accounts.

7. Credit score: Your credit score is a number ranging from 300 to 850 that represents your creditworthiness and is used by lenders to assess the level of risk associated with extending your credit. Your rates on credit cards and loans are all dependent on your credit score, and a bad credit score can cost you thousands in extra interest and years on your loans. You'll have credit scores from each of the major credit bureaus, but they all should be similar.

8. Net worth: Net worth is a number that many people aren't even aware of, but it's an important indicator of your overall financial standing and becomes more critical as you move towards retirement. Simply put, it's all your savings, investments, and valuable items you own minus your debts. Calculating net worth can be tricky if you still owe money on assets such as a house. However, you can calculate equity by taking the current market value of your asset and subtracting what you owe.

Years to desired retirement: While you can access your social security as early as age 62, full retirement age (and therefore, higher monthly benefits) doesn't arrive until at least 66, depending on your birth year. Additionally, most retirement accounts have minimum age requirements for penalty-free withdrawal (59.5 for IRAs, for example). So, if you plan to retire earlier, ensuring sufficient savings to cover your expenses for a few years without relying on social security or retirement accounts is crucial.

Remember: The first step to controlling your finances is knowing where you stand. And no matter where you're starting from, you can always improve your financial situation. So start today! Happy saving!