18 Personal Finance Ratios You Should Know

Personal financial ratios can give you a picture of your proper financial health and progress relative to your goals.

These benchmarks can help you develop better financial habits in these areas: savings, retirement, spending, investing, and debt management.

Your personal financial statements, specifically net worth and the monthly budget, use your financial data to describe an individual’s or household’s  financial condition.

A six ratio means that your monetary assets can pay for your basic needs of food, rent, utilities, and a car loan for the next six months, if necessary.

1. Liquidity Ratio

2. Emergency  Fund Ratio

This ratio will give you a targeted amount of monetary assets needed to be comfortable for a possible emergency.

Your balance statement measures your net wealth at a point in time. As you add to your assets, hopefully outpacing your liabilities, you will be getting wealthier.

3. Net Worth Ratio

Your targeted net worth provides you with an indication of what you should be worth after liabilities.

4. Targeted Net Worth Ratio (The Millionaire Next Door)

The current ratio is the best benchmark to determine liquidity in your household. It measures the household’s ability to repay a short-term debt in an emergency.

5. The Current Ratio

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