What is financial health?
The person's financial health refers to the state of their financial matters. People with good financial health usually have a high credit score, pay their accounts in time, minimize debt, maximize income and plan for the future. The analogy is derived from comparison with the physical health of man. There are several loan reporting agencies that collect data on the person's financial transactions. These companies analyze data and show an evaluation based on a person's financial health. The person's credit score is composed of these different agencies and usually reflects the person's credit risk.
Someone with a high credit score is low for creditors and receives lower interest rates for loans. On the other hand, a low credit score person is a high risk for creditors and receives higher interest rates for loans or is completely rejected. So the first information in determining the financial health of the person is to look at their credit score.
Person with good financial health is usually a planner. This person does not eatn plans to retire itself, but can even plan to create a family heritage with its own foundation. This type of wealth usually requires heritage or lifelong planning.
Good financial health requires the accounts to be paid in time and that no massive, unnecessary debts are obtained. Credit card abuse is a huge drainage of a person's financial health. If the bill is not paid every month in full, interest increases and the person terminates paying much more for the items charged than originally thought. The best way to minimize debt is to start repaying loans that have the highest interest rate.
Not only does the person need to monitor and reduce debt, but the assets must be well managed. Asset can be cash, property or land. Cash should be invested wisely and allowed to accumulate the compound interest. The property or land that quickly appreciates is subject toTax of large capital profits under the US Tax Code and must therefore be sold with anticipation. A certified public accountant may help the person know how to pay the smallest amount of federal and state taxes on income to maintain and maintain wealth.
The concept of financial health can also apply to society in addition to an individual or family. The company's financial health is best observed in financial accounting reports such as profit and loss sheet or balance sheet. These reports may at first glance show the financial health of the company.