The Key Numbers to Financial Success


Many people are disconnected from their finances. It might be due to lack of time, interest or fear that they are in trouble. There are a few numbers everyone should keep track of to ensure their financial success; how much you make, spend, debt you're carrying and what your net worth is. Staying on top of these numbers will help you achieve your goals and give you peace of mind.

Your Income

Do you know how much you make?  My friend recently met with her boss for her annual review.  His first questions to her was, "do you know how much you make?"  I thought this was odd at first but if your boss is about to tell you that you're getting a 3% raise and you don't know how much you make, then you have no idea how much 3% is in dollars.  My friend has been in her current job for a few years so she didn't know what her gross income is.  She isn't alone, her boss told her no one he'd met with knew their gross income. 

Most of us know how much is deposited into our bank account every month net of taxes, benefit costs and retirement contributions but after a few years on the job you probably don't know what your gross income is.  By keeping track of your gross income, you get a better understanding of how much you are putting away for retirement and your other savings goals versus.  A good rule of thumb is to set aside 20% of your income for your financial goals. 


Are you spending less than you earn? Back in the 70's I remember my mom paying for everything with a check or with cash. By paying with cash and checks it was a lot easier to make sure you were spending less than you earned. Now most purchases are made with credit and debit cards, making it harder to stay on track. It's so easy to rack up credit card debt when there isn't an easy way to track all the things you are buying on your various credit cards.

How many months expenses could you cover if you were to lose your job? Keeping track of your monthly living expenses not only helps you ensure you are spending less than you earn but it will also tell you how much to have in an emergency fund in the event of job loss or disability. A good rule of thumb is to have 3 to 6 months of living expenses set aside in an emergency fund. This prevents you from having to dip into savings you've earmarked for retirement, college or some other goal in times of financial distress. 

Many people don't think they need an emergency fund because they think their job is secure or the odds are they won't become disabled. Ask just about anyone who's been laid off and most of the time, they didn't see it coming. Statistics predict that 1 in 4 people will become disabled for a period of 6 months or more before they are 65. When I managed a team of 12 people at Fidelity Investments, I had 4 individuals who had to take disability leave for various health reasons. Some struggled to pay for their expenses even though they had disability insurance at work.  Knowing you have the funds to fill in the gap in times of financial need, reduces stress and gives peace of mind.


Eliminate your debt as quickly as possible.  There are reasons to utilize debt, ultimately it should be used to get us further in our career, business or to our next life goal.  But it is important to analyze the cost of the debt versus the benefit we hope to derive before taking out the loan.  For example taking on over a $125,000 in  student loan debt to do a job where the average income pays just $60,000 per year doesn't make a lot of sense.

Even mortgages should be paid off as quickly as possible.  Many think that because mortgage interest is deductible, that they should delay paying off their mortgage.  It is not deductible from your taxes dollar for dollar, you are still paying a lot more in mortgage interest each year than the benefit of the mortgage interest deduction on your tax return.  If you're paying interest, that is money out of your pocket. So by minimizing the debt you will have more money in your pocket.

Net Worth  

One way I help my clients see if they're on track to reaching their goals is by monitoring their net worth.  

Total Assets - Total Liabilities = Net Worth

Your net worth is calculated by adding all your assets together; investments, savings, personal property, retirement accounts, etc. Then subtract all your debts; car loans, mortgages, student loans, credit card debts, etc. Ideally each year you should see net worth increasing.

For clients that avoided their finances for fear that they were in trouble, I have found that calculating their net worth is often a pleasant surprise. It's hard to keep track of everything when your assets are scattered among various banks, retirement plans and are in the form of houses, jewelry, etc. It's been my experience that people are not as bad off as they think they are and with a few changes can be in a much better financial position in a short amount of time.

You probably have multiple bank, credit card, retirement and investment accounts so keeping track of all these key numbers is difficult and time consuming. That's why I offer my clients access to the Emoney dashboard. By linking all their accounts to the dashboard, they can see real time what their net worth is, whether their spending less than they earn and how all their investment and retirement plan accounts are doing. Being able to see all my client's accounts real time allows me to take service to a new level. By seeing how their retirement plan accounts at work are performing, I'm better able to make sure they are on track to reach their retirement goals.  My clients can make better informed financial decisions because they can see real time the impact a major financial decision such as a job change, move or major purchase will have on their overall plan.  Best of all we are able to do this in my office or remotely from anywhere in the world.

Technology today makes it easier than ever before to stay on top of your financial situation. Get started today, the sooner you start, the easier it will be to reach your goals. Call me today for a free consultation. We'll discuss your financial concerns, what I can do to help and figure out if we'd be a good fit for getting you to where you want to be.