If you want to manage your money better, there are some money numbers you should know and know how to find, and these money numbers can be quite important for varying reasons.
In the article below, I’m going to explain the most important money numbers you should know about and how they affect your financial life.
Whether you’ve been avoiding some of these important money numbers or if you simply did not realize they were important, today’s article is a great place to start getting on track.
Many people are unaware of parts or even their whole financial situation, and today’s article will help.
However, while simply reading this article will help, I highly recommend that you become more aware of your financial situation.
Being aware of your money situation can help you:
- Manage your money better
- Reach your goals
- Better approach financial situations
- Be proactive about your life and finances
- Help you keep a budget
- Prevent everything from falling on one person
- Stop financial infidelity
Without being aware of your money numbers and your overall financial situation, it would be difficult to ever change your financial life for the better.
Because of what I do, I have talked to a lot of people who want to improve their lives but are unaware of some of the money numbers I’m going to discuss today.
There have been many times when someone has told me that they have no idea what their monthly mortgage or rent payment is, they don’t know how much they are putting towards retirement, they are unaware about how much debt they have, and so on.
More shockingly, some people can’t even give me an estimate of any of those numbers. There have even been times when a person guesses at a number, but then their significant other chimes in to say that they’re completely wrong. For example, one person may think that they have $30,000 in credit card debt, but they are actually corrected and told that they have $50,000 in credit card debt.
Today’s article is going to explain why numbers, like your total amount of credit card debt, are so important.
Even if you think some of these numbers aren’t relevant to you right now, I believe everyone can learn more about them.
9 Important Money Numbers You Should Know
1. Your net worth
Your net worth is an important number to know because it gives you an overview of how you are doing financially.
According to the Association for Financial Counseling and Planning Education, only 5% of people know their net worth.
Your net worth is one of the most important money numbers you should know 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 knowing your net worth, such as:
- It may help you manage your money better. If you know your net worth number, you may be more mindful of your spending and other financial decisions, and it might encourage you to keep a budget. After all, if you have a negative net worth or if it’s not as high as you hoped, then you will be quite motivated to work on increasing it.
- Your debt matters too. Many people only think about what their assets are, but your debt plays a big factor!
- It may stop financial infidelity. Financial infidelity is when one partner keeps money secrets from the other partner, and the chance of this happening is even higher when you aren’t aware of your net worth.
- It 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 so you can easily see your financial situation. You can connect and track your accounts all in one place, such as your mortgage, bank accounts, credit card accounts, investment accounts, retirement accounts, and more.
2. The amount of debt you have
Your total debt is an extremely important money number.
Here are the debt numbers you should be aware of:
- Your monthly mortgage payment
- How much credit card debt you have
- The amount of student loans you have
- Your interest rates on your debt
- Your estimated debt payoff date
- How much your car loan is costing you
I recommend learning these numbers – there is no reason to stay in the dark when it comes to debt!
One reason that people don’t know their debt numbers is because they don’t want to face their debt. Or, unfortunately, your spouse may be trying to keep this a secret from you so that you don’t realize how bad your financial situation is.
If this is you, then I recommend changing things immediately.
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 the real number.
The first step to paying off your debt is to add up exactly how much you have. This will help you make a plan to start paying it off and move on with your life.
3. The amount of money you’re saving each month
The average person saves around 5% of their income every month. However, this likely isn’t enough for most people to live off of during 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 what changes you need to make to 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.
If only one person manages and knows this number in your relationship, I recommend that you’re both aware of your savings number so you can work on saving more together.
4. The amount of money you’re spending each month
Some people have no idea how much money they spend each month.
Your total monthly spending is one of the most important money numbers you should know because it will give you a better idea of whether or not you can truly afford things. It will also show you if you are saving money, wasting money, areas to save money, and more.
This can help you make better financial and purchasing choices in the future.
I recommend creating a budget and tracking your spending to see where your money is actually going.
5. Your after-tax income
This is the amount of money you bring home after taxes, health insurance, and anything else that may be taken from your paycheck each month. This is the actual amount of your paycheck!
Some people spend their paycheck before they even receive it (like if you were to get a car loan right immediately after receiving a job offer). This is such a dangerous idea because you probably think you’re bringing home more each month then you really do.
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. This allows you to create a budget based on your after-tax income, and your budget will reflect how much you can afford and help you plan better.
6. Your credit score
Okay, not everyone will agree with me on this one. However, if you have future plans to get a loan, then knowing your credit score is incredibly important. This is because your credit score shows others your creditworthiness, and is used as an indicator of how risky you are.
Your credit score is a major factor in determining interest rates and how much the bank will lend you.
By knowing your credit score, 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.
Plus, you can check your credit score with Credit Sesame for free, and it only takes a few moments.
In addition to this, I recommend getting your free credit report at least once a year. You can receive one annual free credit report from the three main credit bureaus (Equifax, TransUnion, and Experian). Yes, this means that you get one from each, so three each year. I recommend spacing them out so you can get one every four months. You can learn more about how to get your free credit report here.
7. 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 your debt
- Making a higher income
And more! 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.
8. Family account information
What would you do if there was an emergency? Would you know all of your family’s important account numbers?
One of the best ways to prepare is with an emergency binder. It’s a way to store financial information, like bank account numbers and passwords, all in one place. You can store insurance information, personal details about you and each member of your family, information about bills, and more.
Having an emergency binder is quite important.
I know there are many, many families who would be very lost if something were to happen to the person who usually manages their finances.
You can misplace account information, lose passwords, forget to pay bills, not find life insurance information, and more.
It’s best to keep a family emergency binder with everything in one place just in case something were to happen, even if it’s something no one ever wants to think about.
I recommend having an emergency binder if:
- You have a family
- You have children
- You are single – this is because someone will have to handle your affairs if something were to happen to you, and they’ll most likely have no clue as to where to start. The binder can guide them.
An emergency binder can help pretty much everyone and anyone.
This can be useful in non-emergencies as well. Creating a binder like this organizes all your family’s information in one place. It makes finding any piece of information quick and easy, and you’ll probably refer to it often.
My top tip is to check out the In Case of Emergency Binder to help you with creating your own emergency binder. This is a 100+ page fillable PDF workbook.
9. Desired years until retirement
Retirement is the long-term goal for many people. You spend decades working with the hope of one day retiring, and knowing when you want to retire is an important part of financial planning.
You may have to spend some time thinking about when you want to retire, but once you have that number, you can make a plan to reach it on time.
Your desired years until retirement will tell you how much money you need to save between now and then, if you’re on track for retirement, and more.
How can my family stay updated on these money numbers?
Because the money numbers in today’s article are so important, I recommend holding regular money meetings with your partner to find and discuss them.
In your money meeting, you should:
- Look over your debt amounts
- Check your expenses
- Discuss your financial goals
- Talk about what changes need to be made
- Update your family budget
- Check in on your retirement planning
- Discuss any financial problems
There is no exact outline of what you should talk about in your money meetings because every financial situation is different.
Money meetings will help you become more comfortable talking about your finances, and they make it easier to set goals and work towards them with your partner. I know talking about money can feel uncomfortable at first, but starting to have regular money meetings is very important.
Do you know these important things about your money?
Certainly agree, being proactive and taking the best approach with budgeting. Also nice to see that you recommend saving around 5% as that’s the number that I have stuck with for some years. Great read!
Thanks and take care.
Faraz Choudhary says
Thank you for sharing this insightful article on the 9 most important money numbers to know. It’s incredibly valuable to have a comprehensive understanding of personal finance and these key numbers provide a great starting point for anyone looking to improve their financial literacy.
Interesting list. Even as somehow who is kind of obsessed with this stuff I didn’t know some of these numbers off the top of my head and hadn’t even thought about others as well!