6 Numbers You Need to Know

Introduction

The numbers in your financial life are the building blocks for all of your financial decisions. They're essential to having a good credit score, buying a home, and saving for retirement — but most people don't know what those numbers mean. If you're like many, you probably have no idea how much money is in your bank account or what it means when someone talks about their "credit score". That's why I'm going to explain six key numbers that will change the way you look at finances forever:

#1 Monthly Living Expenses

You should know how much it costs you to operate your home and all of the other monthly living expenses.

Monthly living expenses are what you spend on rent or mortgage payments, utilities, transportation, and insurance. These expenses are fixed and variable depending on their nature. Fixed expenses are those that come up every month like your rent or mortgage payment while variable ones fluctuate with the season or economic conditions such as food prices. You need to be able to estimate these numbers for yourself so that you will have an idea about how much money is left over after paying them off each month so that you can start saving up for other things like vacations or investments.

The best way of calculating these numbers would be by creating a budget where everything gets categorized into different sections such as putting food on the table, keeping a roof over your head, or getting to and from work.

#2 Bank Account Balances

There are a lot of reasons why it's important to know your bank account balances. The first reason is to keep track of your spending, so you can make sure it's in line with your budget and goals. The second reason is that it will help you avoid fees from overdrafts, which can add up very quickly!

When you're a kid, it seems like all you ever hear about are the rules of money. Your parents and teachers tell you that it's important to save and to spend wisely, but they never really explain why.

As an adult, it's easy to have a lot of different bank accounts—checking, savings, credit cards—and it can be hard to keep track of everything. But if you want to make sure your money is working for you instead of against you, then keeping an eye on your bank balances is a must!

Here are some tips for tracking your bank account balances:

1. Get a free budgeting app that tracks your spending and helps you set goals for how much money you want in each account (e.g., $100 in checking, $200 in savings). That way every time you make a purchase or deposit money into one of your accounts, the app will automatically update itself with the new balance.
2. Check in on your balances at least once a week (or even better: twice!). This way if there's an unexpected or fraudulent charge on an account, then you’ll be able to contact your bank to get the error corrected.

#3 Total Amount of Debt

Total debt is the total amount of money owed, including credit card balances, student loans and car loans. It also includes personal loans that you've taken out to consolidate other debts or pay for things like a wedding or medical bills.

Total debt can help determine how much you should be paying each month on your various debts. For example: if your total debt is $100k and you only bring in $3k per month (or $36,000 annually), then it would take approximately 7 years to pay off your total debt with the current amount of income coming in each year.

This number will vary depending on how much interest rates are for each type of loan as well as whether or not any promotional periods have expired for any given account that charges interest (which will also affect how long it takes to pay off).

#4 Annual Medical Deductible and Out-of-Pocket  Expense

The annual medical deductible is the amount that you must pay before your health insurance kicks in. The out of pocket limit is the maximum you will have to pay during each plan year before your health insurance begins paying 100% of covered expenses. The actual amounts are different for each type of policy, and it’s important to know how they can impact your finances.

#5 Retirement and Investment Contributions

You know you should be saving for retirement, but how much are you actually contributing?

Contribute 3 to 5% of your pay to retirement and strategically increase your retirement contributions each year and when you receive a raise. Ultimately, your contribution goals should be between 12 and 15 percent.

The key is to start small, then increase the amount of money that you contribute each year. For example, if you're making $60,000 a year and contributing 5% ($3,000), increase that contribution by 1% every six months or so until it reaches 10% ($6,000) or more of your annual income. Then, once per year (or whenever you receive a raise), increase your contributions by another 1%.

As time goes on and your salary increases, it's important to remember that the percentage of income that you should be contributing to retirement should also increase—so don't let yourself get stuck in a rut!

The truth is you need to contribute as much money as possible to your retirement account every pay period. The amount of money you should be contributing depends on several factors: your age and income, the type of retirement plan you have, and how much time you have until retirement.

But there are some basic rules of thumb that can help you get started:

Start by contributing 3 to 5 percent of your pay to retirement every pay period. This percentage should increase over time as your salary increases and you get closer to retirement age. If you're just starting out with a new job or career, or if you're fresh out of college or graduate school and don't yet earn very much, this may feel like an astronomical amount for one person to save! But we promise—it does add up fast over time!

#6 Credit Score

You need to know your credit score. This number is between 300 and 850, with a higher score being better. It's calculated based on your credit history and indicates whether you're responsible about paying off debts or if you're a riskier borrower. People with higher scores have lower interest rates when applying for loans or credit cards because they are considered less likely to default on the payments. Lower scores indicate that you may be more likely to default on payments, so lenders will charge more interest (or not give you the loan at all).

Conclusion

These are just a few of the essential numbers you should know and keep track of.

As you can see, it’s not too complicated or time-consuming to keep these numbers in mind, but they can make a big difference in your life. For example, if you have a high credit score it may make it easier for you to get approved for loans or credit cards when needed; if your bank account balance is low then it could impact whether or not bills get paid on time each month (which affects your credit score). These numbers can also help determine what sort of insurance premiums will cost or even how much tax liability there may be for individuals who claim certain types of income as well as businesses that pay employees' salaries every year! The point here is simple: knowing these things means knowing yourself better than ever before so that when faced with an important decision such as buying something new like furniture - which requires financing upfront - one knows exactly how much money they need upfront before making such purchases.