One of the most popular measures of financial health in the U.S. is a person’s credit score.

It’s one of the first things lenders check when you request a loan and is an important factor to many landlords, insurance companies, government agencies, employers and utility providers.

But does that three-digit number tell the whole story?

“Financial health is a lot like our physical health,” Brent Weiss, co-founder and head of financial wellness at Facet, said in an email.

“We all know we should be eating a healthy diet, staying active and getting enough sleep. But how do you measure your overall physical wellness? Your weight? Your BMI? Your number of steps? The truth is that it isn’t just one metric that determines true wellness,” he added.

To gain a more holistic understanding of your financial health, here are five factors to track:

1. Discretionary Income

Your financial life stems from your cash flow, so start by tracking your discretionary income – the amount of net income you have left after paying for your necessities each month.

  • Deduct taxes from your gross monthly income amount.
  • Review your net monthly income and all of your expenses.
  • Categorize your expenses as necessities and non-necessities.
  • Calculate the percentage of your net income you spend on necessities.
  • Subtract that percentage from 100%.
  • The remaining amount is your discretionary income.

A common guideline is the 50/30/20 rule, which recommends that 50% of your net income goes to necessary expenses, 30% goes to wants and 20% goes to savings. If your discretionary income is ever less than 50%, you may want to look for ways to reduce your monthly expenses or increase your income.

2. Debt-to-Income Ratio

Another factor to check is your debt-to-income (DTI) ratio, which is the percentage of your gross monthly income you spend on debt payments. To find yours, divide your monthly debt payments by your gross monthly income.

For example, suppose you make $7,500 per month and have a $3,000 house payment, $600 car payment and $350 in other credit payments. Your DTI would be 53% ($3,950 divided by $7,500).

According to Wells Fargo, a DTI of 35% or less is good, 36% to 49% needs improvement and 50% or higher is problematic. However, you may begin to experience financial distress below the 35% mark.

“If your DTI is above 30%, it could potentially make things feel tight on a monthly basis. This is when we want to develop a strategy to pay down debt to reduce financial anxiety,” Brandon J. Galici, a certified financial planner and the founder of Galici Financial, said in an email.

3. Net Worth

Knowing your net worth can help you gain a holistic view of your financial situation. It can also help you understand the estate you’ll leave behind when you pass away.

To find yours, add up all of your liabilities and subtract them from your assets. Common assets include cash, bank accounts, investment accounts, retirement accounts, vehicles, real estate, jewelry, electronics, appliances, furniture and permanent life insurance policies with cash value components. Common liabilities include outstanding credit line balances, loan balances and bills.

Once you’ve calculated your net worth, check how it stacks up to your own personal goals and the median net worth of Americans your age. If necessary, make adjustments.

Age of Reference Person Median Net Worth (2022)
All U.S. families $192,900
Younger than 35 $39,000
35 to 44 $135,600
45 to 54 $247,200
55 to 64 $364,500
65 to 74 $409,900
Older than 75 $335,600

4. Savings Goal Progress

Another important aspect of financial health to keep tabs on is progress toward your savings goals. For example, if you’re saving to buy a new house in five years and retire in 25 years, you’ll want to ensure your savings and contributions are on track to achieve both.

Tim Smith, a certified financial planner and the founder of The Financial Dad and Aurora Private Wealth, says financial advisors typically review your financial plan each year to ensure your savings are on track. However, if you don’t have an advisor, Smith says you can perform the review yourself using websites like Fidelity.

“Based on your outcomes, you can adjust your spending, saving, 401(k) contributions, retirement plans and more. It’s important to do this annually (at least) to provide adequate time for course adjustments when they’re needed,” Smith said in an email.

5. Credit Score

Last but not least, keep tabs on your credit scores. While not a measure of your full financial health picture, they do speak to your ability to manage your current debts and are an important part of the current financial system.

Keep yours in the best shape as possible by making all of your payments on time, keeping revolving credit balances low, keeping accounts open long-term and limiting hard credit inquiries. FICO scores of 670 and above are considered “good.”

A Holistic Approach to Financial Wellness

Assessing financial wellness can be complicated. It doesn’t help that Americans aren’t generally taught about financial health in school and many find access to financial advisors too expensive.

But some companies are working to make it easier.

Weiss explains that his company, Facet, has a new wellness score that gives everyday Americans one tool to measure and manage everything in one place including their money mindset, goals and values, savings and debt, investments, insurance and estate planning and more.

Tools like these and a greater understanding of what to track can hopefully help make financial wellness less elusive to the general public in the years to come.