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The strongest 7 Personal Financial Indicators | Payday Loans



 It is very fashionable to talk about prosperity and abundance, using empty words and in the end not to measure anything. When the prosperity analysis is about money, things are simple, because “money is countless.”

Your family is financially healthy? Find out what indicators to calculate and what is their optimal level. In order to calculate these indicators, we will give a brief description of the elements used in these examples.

Total Assets = All holdings of a person / family starting with real estate, shares, bonds, money in accounts, unlisted business shares, jewelry and precious metals, art objects, etc.

Total Debt = current balance of all loans and debts irrespective of their destination.

Total Debt = current balance of all loans and debts irrespective of their destination.

Below are the most important 7 financial indicators that are ideal to consider when you are interested in knowing how to stay in terms of family financial health.

1.Solvability of the family
Total Asset (At) / Total Debt (Dt). A family is totally insolvent if the indicator is subunit. Properties for which market value can not be calculated are not included in the asset class.

2. Net wealth
The difference between Total Assets (At) and Total Debt (Dt). Probably one of the most relevant personal financial indicators . Total assets are represented by all family holdings (see definition) and total debts are the sum of all loans and family loans. According to the latest statistics, the net wealth of an adult in Romania is approx. 10.000 Euro.

3. Liquidity of assets
Assets invested (Ai) / Net asset (NA). Assets invested mean total assets less the house used as home. Normally this indicator should be at least 25% with a growth direction towards the retirement period. That is, the older you are, the indicator should be closer to 50-60%.

4. Oxygen tube
It is calculated as the ratio between Liquid Assets (Al) / Total Monthly Expenses (CT). Normally, this indicator should have a value between 3 and 4, ie liquid assets (cash and life insurance) are 3-4 times higher than the monthly family expenses. Obviously, without a personal cashflow, it will be impossible to calculate this indicator. I recommend using the Dollarbird application or requesting the Excel Cashflow Burcash file by mail. If total spending fluctuates from one month to the next, take into account the month with the highest spending in the year.

5. Savings rate
Monthly Savings (El) / Total Monthly Income (Vt). This indicator reflects the appetite for saving and will be strongly correlated  with the investment capacity of the individual or family. Experts rank the optimal level of savings above 10%. I also met people with very high incomes, whose savings index reached 90%. A steady upward trend of this index will in time lead to an increase in net wealth.

6. House Cost (Real Estate Cholesterol)
Total House Cost (CT) / Total Income (Vt). Where total house expense includes: bank rate + property tax + house insurance + house maintenance costs. The amount thus obtained is divided by the total revenue. The indicator should not exceed 28%.

CAREFUL! Banks allow the debt to reach 70% of the net eligible income, provided that the income exceeds 1,500 Euro per month.

7. Financial health
Net Net (AN) / Total Monthly Expenses (CT) ratio. Financial health is measured in months and is the indicator that tells you how long you can live, at the current level of living if you sell everything and pay your debts. The minimum level must be 100 months.

Let’s take an example now to make it clearer how these indicators are used in a typical family.

The Ardelean family (Andrei and Maria) has a personal property valued at 62,000 Euros, a personal property car worth 9,700 Euros and a land worth 12,000 Euros. Debts to be repaid amount to 54,000 euros mortgage loan; 4.500 Euro credit for personal needs. Monthly family incomes are 1,155 euros and total monthly spend of 1,022 euros. Total home expenses are 390 Euro per month.
The Ardelean family also owns a bank deposit worth 2,000 Euros.

Total Assets (At): 62,000 + 9,700 + 12,000 + 2,000 = 85,700 Euros
Total Debt (Dt): 54,000 + 4,500 = 58,500 Euro

The picture of the financial situation of the Ardelean family

indicator Formula The value Optimal level and observations
creditworthiness S = At ​​/ Dt


The minimum value is 1. We exceeded the critical point.
Net wealth AN = At ​​- Dt

27,200 Euro

A level above the national average of 10,000 Euro for an adult.
Liquidity of assets La = (Ai / At) x 100


The optimal level is over 25%.
Oxygen tube TU = Al / CH1


Insufficient. The minimum value is 3 and the optimum is 6.


Savings rate Re = El / Vt


Hi. The minimum level is 10% per month.
House Cost ( Real Estate Cholesterol ) Cl = CT1 / Vt


Too big. It exceeds the minimum threshold of 28%.
Financial health Sf = AN / Ct

26 months

Poor. Under the minimum of 100 months.

From now on, it will not be a mystery to anyone and you will be able to calculate yourself / how you actually stand financially.

I’m waiting for your questions and comments on this topic. If you liked the article and the information in it gives a share to your friends, they will certainly thank you for that.