When you go to the doctor for a physical your health care provider probably routinely records four important numbers as a base line indicator of your health. Your vital signs consist of your blood pressure, breaths per minute, pulse and temperature. There are important numbers when it comes to your financial health as well: your credit score, debt to income ratio and your savings rate.
Your Credit Score
Your credit score is used most frequently by lenders to evaluate the risk involved when loaning you money. With your consent, your credit score could also be used when considering you for employment, insurance or housing. The normal range for a credit score used by the Fair Isaac Corporation is 300-850, but the exact scoring method is determined by your lender. You can get a free copy of your credit report (the information by which your score is determined) if you are ever denied credit or by visiting https://www.annualcreditreport.com.
Your Income to Debt Ratio
Your debt to income ratio looks at the percentage of income that goes toward paying all recurring debt payments such as credit cards, car loans or even child support. You can calculate this ratio yourself by adding up all of your debts and dividing it by your income. The National Association of Credit Unions suggest that a debt ratio of 36% or less is ideal for most people.
Savings Rate
Your savings rate is the amount of personal income expressed as a percentage that you save. Your savings rate is another figure you can calculate yourself (Total dollars saved per month / total disposable income = savings rate). In, “How Much Should We Spend,” UF IFAS Extension publication FCS5229 the recommended savings rate for your general savings, your emergency fund and miscellaneous expenses is 2-20% of your income.
If you knew your numbers and they are above par then give yourself a pat on the back if you need more information that is no problem either. Contact your UF/IFAS Extension Family Consumer Science Agent (FCS) can meet with you or your small group and explain to you in more detail what each of these numbers are, where to find these numbers and provide you with the resources you need to know where you stand. You wouldn’t ignore your vital stats, so don’t neglect financial stats either. For more information contact your UF IFAS Extension office by visiting http://solutionsforyourlife.ufl.edu/map/ or contact UF IFAS Jefferson County Extension Agent, Kristin Jackson at 850-342-0187 or jefferson@ifas.ufl.edu.
Resources:
National Institutes of Health. (2014). Vital signs Retrieve 27 August from http://www.nlm.nih.gov/medlineplus/ency/article/002341.htm
Turnner, J. (2006). How Much Should I Spend? Retrieved 27 August from http://goo.gl/d29h5r
Credit Union National Association Inc.(2014). Debt to Income Ratio. Retrieved 27 August from http://hffo.cuna.org/12433/article/316/html
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