Do You Know These 8 Important Things About Your Money?

Many people are unaware of parts or even their whole financial situation. They might not know how much debt they have, how much they spend each month, and so on, and this can really hold a person back. Being aware of your financial situation can help you to: Manage your money better Reach your financial…

Michelle Schroeder-Gardner

Last Updated: May 25, 2023

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Being aware of your money can help you to manage your money and life better. Here are 8 things you should know about your money.Many people are unaware of parts or even their whole financial situation.

They might not know how much debt they have, how much they spend each month, and so on, and this can really hold a person back.

Being aware of your financial situation can help you to:

  • Manage your money better
  • Reach your financial and life goals
  • Realize if something is wrong
  • Change for the better
  • Wisely approach financial situations
  • Be proactive about your life and finances

Without being aware of your money and your financial situation, it would be difficult to ever change for the better.

Below are several things that you should know about your money.

 

1. The financial goals you want to achieve.

Everyone has dreamed of what their life will be like in the future. Your financial goals may include:

  • Retiring or reaching financial independence
  • Paying off debt
  • Making more money
  • Pursuing your dreams
  • Saving a certain amount of money

And so on! There are so many different financial goals.

Knowing your financial goals is important as it can help give you direction as to what you should work towards. Plus, knowing that you are working towards something can be extra motivating.

 

2. The amount of debt you have.

Knowing how much debt you have is extremely important. I know people who don’t know how large their mortgage is, what the interest rate on their car loan is, and so on.

Unless you face and acknowledge your debt, you probably won’t ever get out of it. Plus, you will never fully grasp what your debt is doing to your life until you face how much debt you have.

The first step to paying off your debt is to add up exactly how much you have.

Other good things to know about your debt include what your monthly payments are, how much you are paying in interest, and how many more months or years you will still have your debt for.

 

3. How much money you’re saving each month.

The average person saves around 5% of their income every month. This will most likely not be enough to have a satisfactory retirement, meaning the average person should definitely be saving more money.

By knowing how much you’re saving each month, you’ll have a better idea of how you need to change or improve your money management. Most people believe that they are saving more money than they actually are.

Plus, it may be exactly what you need to see in order to whip yourself into better financial shape.

 

4. How much money you’re spending each month.

Many people have no idea how much money they spend every month.

By knowing your money better and how much money you’re spending each month, you will have a better idea of whether you can truly afford things, whether or not you are saving money, if you are wasting money, and more.

This can help you make better financial and purchasing choices in the future.

Learn more about how to create a budget that works at The Complete Budgeting Guide: How To Create A Budget That Works.

 

5. The amount of money you are actually bringing home.

Some people spend their paycheck before they even receive it (such as by getting a car loan right after they get a job offer). This is a bad idea because what you think you will be bringing home each month may be completely different than your after-tax income.

After deductions, taxes, health insurance, and anything else that may be coming out of your paycheck, you may be left with a much smaller amount than you originally thought.

There are many other reasons to know your after-tax income as well.

By knowing your after-tax income, you know exactly how much money you have to work with each month. By creating a budget based on your pre-tax income, you will be unable to create a budget that reflects how much you actually have or how much you can afford!

 

6. What your credit score is.

A credit score is a number that shows others your creditworthiness, and is often used as an indicator of how risky you are.

By knowing this number, you can be better prepared when shopping for home or car insurance, renting a home, buying a home, applying for loans or credit cards, and more. Your credit score can impact whether you are even approved for a loan, as well as the interest rate you receive if you are approved.

Your credit score is an important part of your life, but there is a myth that you have to pay for your credit score.

That is incorrect.

You can check your credit score with Credit Sesame for free, and it only takes a few moments.

 

7. That you should regularly talk about your money.

Talking about money and conducting regular budget meetings is an important task for every family and serious relationship to take part in.

However, many couples and families don’t regularly talk about their money.

A family who has regular money talks and budget meetings is more likely to be financially successful and happier than a family that avoids these types of conversations.

Regular money meetings can lead to better communication between family members, a more unified financial goal, family members being more involved and motivated, and more.

When was the last time you talked about money to your significant other?

 

8. Your net worth.

According to the Association for Financial Counseling and Planning Education, only 5% of people know their net worth.

It’s good to know your net worth because you’ll be able to see a more complete picture of your financial situation, which will help you work towards realistic financial goals.

There are many other positives to being aware of your financial situation and net worth, such as:

  • Knowing your net worth will help you manage your money better. If you know what your net worth is, you may be more mindful of your spending and other financial decisions, such as with keeping a budget. After all, if you have a negative net worth or if it’s not as high as you hope, then you will probably be quite motivated to work on changing that for the better.
  • Your debt matters too. Many people only think about what their assets are and base how well they are doing on just that. However, your debt plays a big factor! If you have a lot of debt, do you really think you are doing all that well?
  • Knowing your net worth may stop financial infidelity. Yes, knowing your net worth can help you be aware of your financial situation. If you are unaware, then the possibility of financial infidelity is much higher.
  • Being aware can help you with your financial goals. Like I said above, knowing your net worth is a great measure of how you are doing. If you know how you’re doing, you can be more motivated with your goals. Plus, knowing your net worth just makes sure that you are more aware of what’s going on!

You can easily track your net worth with Personal Capital. Personal Capital is a free service that allows you to aggregate your financial accounts to easily see your financial situation. You can connect accounts such as your mortgage, bank accounts, credit card accounts, investment accounts, retirement accounts, and more. And, it’s FREE.

Learn more at Do You Know Your Net Worth?

Do you know these important things about your money?

 


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Michelle Schroeder-Gardner

Author: Michelle Schroeder-Gardner

Hey! I’m Michelle Schroeder-Gardner and I am the founder of Making Sense of Cents. I’m passionate about all things personal finance, side hustles, making extra money, and online businesses. I have been featured in major publications such as Forbes, CNBC, Time, and Business Insider. Learn more here.

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  1. I totally agree that a family who has regular money talks and budget meetings is more likely to be financially successful and happier than a family that avoids these types of conversations. I must agree that before, we don’t usually talk about our money and we didn’t even have a budget! But now, we always talk about it.

    1. Yes, talking about money is so important!

  2. Amanda

    Knowing your net worth can be a real eye-opener. Many people may be shocked to learn they have a negative net worth. Simply knowing what your big financial picture actually looks like is a great starting point for making changes to your financial situation.

  3. I’m doing pretty good. I know most of those answers. The plan is to now eliminate more of this debt and grow my net worth.

  4. Mrs. Picky Pincher

    It was so funny. I called my bank a few years ago to set up my IRA and they asked me, “What is your net worth?”

    I paused and said, “Uhhh… Is it possible to have *negative* net worth?”

    Apparently banks think that’s hilarious.

    But yes yes yes. You can’t get out of debt if you don’t know where your money is going, period!

  5. Totally agree with talking about money is key, it might be difficult at first but the more you do it the better you’ll become at it

  6. David @ Thinking Thrifty

    I don’t know a single couple who don’t talk about money that are successful in how they manage it. It’s still such a taboo subject here in the UK, even some of our bloggers have been forced to quit due to their partner not wanting their finances discussing in the public domain. Thankfully I have no such problem!

    1. Yes! Talking about money is so important.

  7. Lisa

    I like all of these suggestions; knowing your net worth is so important. I prefer getting my credit reports from http://www.annualcreditreport.com and putting my accounts together in the app mint. I have used Credit Sesame and Credit Karma though; Credit Karma’s information takes a while to update and sometimes the credit scores are off.

  8. Seize The Aisle

    All of these points are incredibly important.I think of points 1 and 7 as something you need to come back on a regular basis. Couples need to keep coming back to discussing their goals, discussing their financial situation, and remind themselves why they are dedicated to making their goals a reality. A big part of the difference between being happy and not happy is whether you are travelling the road of your own design on the path to a goal that makes you both happy or if you aren’t paying any attention and then end up at a place you wish you were not at.

  9. Michael

    Knowing our net worth is important. That is a good first step.

    It is always good to have target net worth – a life size goal. Once you have a life size goal then you can taking steps towards you goal.

    Pursuing your net worth goal makes you even better.

  10. #7 #7 #7. A million times over. That feeling of insecurity talking about your money is the same insecurity that needs a new house or car to keep up with the Joneses. ๐Ÿ™‚

    Being more honest and open about it will help you realize your worth as a human isn’t tied up in what you own. Which makes shopping and dumb purchases easy to say no to.

  11. I don’t track our net worth religiously. I get far too obsessive about numbers. I will occasionally add up all of our accounts, but it honestly just made me far too cautious with money to track down to the penny every other week or even every month. I do think that it’s a powerful thing to do — reconcile your income and assets against your debts — but it’s also not the only marker of financial well being. As you point out in your list, it’s so important to do so many money things!

  12. Erica Holland

    Loved this post. It is so important to be financially independent and fiscally self-aware. Money and personal finances are certainly not talked about enough, but these are healthy conversations to have!

  13. This is a great, basic rundown of everything you need to keep on top of your money. It’s true that we need to have conversations with our family members and especially financial experts in order to get a true handle on what is happening with our money. I used to have reticence approaching other people in helping make my financial decisions, but I’ve found out it’s a good way to hear objective analysis thrown your way. I believe several other blogs have pointed this out as well. Thanks for the good post.

  14. Lindsey Mozgai

    Having regular money talks and keeping track of your money are so important! For many months, we had no idea how much we were spending, and in your head you always underestimate how the little things will add up.

  15. You can also set a budget up using a spreadsheet or just write it all down on a piece of paper.