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How Healthy Are Your Finances? 4 Signs You Should Consider

Posted on October 10, 2019

When you go to a doctor for a checkup, they perform a variety of tests. They’ll check your blood pressure and heart rate, measure your weight, listen to your lungs, and smack your knees with a hammer for your reflexes. They do all of this to check your overall health and try to identify potential problems.

Your finances, just like your body, needs regular checkups to make sure everything is healthy. There are quite a few tests you can perform on your own to see how well your finances are doing, the most common one being your credit score. Often, people assume that if you have a high enough credit score, you must be doing great! But your credit score is just one part of your credit health, here are some other points to look at for your overall financial wellness.

Do You Have an Emergency Savings?

doctors looking at an xrayBad things happen to people all the time. Layoffs, medical emergencies, and broken cars are all things that can require dipping into your savings to cover. Nobody is safe, meaning it’s important for everybody to have some emergency savings they can fall back on. Having a full emergency fund to fall back on is a major sign of financial health and stability.

The question then becomes: how much money should you keep in your emergency savings? A few hundred dollars might be enough to cover a smaller emergency, but you really need something substantial in case something major does happen.

A good common rule of thumb is to have enough saved up to cover your expenses for three months. That includes living expenses, food, bills and payments on debts you have. An easy way to figure this out is to take your monthly budget expenses that are essential and multiply it by three.

But this shouldn’t be just a flat number, it should be constantly evolving based on your needs and circumstances. As your expenses increase year over year, your emergency fund should grow too. Additionally, be considerate of the future too. If your car is getting old, maybe increase your emergency fund in case of necessary repairs or replacement.

If you want to grow your emergency savings at a quick rate, sign up for Pioneer’s Special Purpose Savings Account. With it comes a higher interest rate to help you build up your emergency funds quick.

Open a Special Purpose Savings Account!

Regularly Contributing to your Retirement Funds

two older couple smiling at the cameraRetirement is a major financial goal that requires both early and frequent contributions to achieve. Decades of saving is required in order to retire. From the moment people enter the workforce, they should start planning how they are going to retire.

A clear sign of financial wellness is being able to regularly contribute towards your retirement and being on track to retire when you want to. Whether that means working with your employer’s 401K or contributing to your own IRA, creating a plan for contributions to reach your goal is essential.

If you don’t currently have a retirement fund created, you can open an IRA with Pioneer to get started.

Paying Your Debts On Time

While it’s best to have zero debt, it is unavoidable for many situations, including buying a home or a car. If you do have debts, a clear sign of financial wellness is having the means to pay for them in full, on time. It’s even better if you are making larger than the required payments to get rid of your debt quicker.

Alongside this, being responsible with what debts you take on is a sign of financial wellness and maturity. Taking on too much debt is a quick way to ruin your finances and put yourself deep in a hole. Even if it’s putting something on a credit card you can’t pay for right now, any time you take on debt you need to carefully consider your situation.

Pay For Things Without Dipping Into Savings

young woman looking at an iPadWhether it’s a night on the town or buying yourself something nice, it’s important to treat yourself from time to time if you can afford it. The key part though is managing your finances in such a way that you don’t dip into your savings anytime you do something nice for yourself.

There are several ways to accomplish this depending on your situation. You can set up a separate savings account to save up for buying nice things, build this spare money into your budget every month and give yourself a set amount to spend, or create a system where you can still reward yourself occasionally such as using credit card points to pay for gift cards. Just like you can do with Pioneer’s Rewards!

Whenever you use a Pioneer credit or debit card, you are accumulating points you can redeem for gift cards, products, or even money in your account. Do you have a Pioneer credit card? If not, open one today and start accumulating more points every time you use it.

Apply for a Pioneer VISA Credit Card!

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