Fortunately for us all, my friend Joshua Yeary from USA has developed an excellent new scoring method known as the Personal Finance (PF) Score, which helps to determine a person's financial fitness level.
<0 = You have a negative net worth and need to get out of debt NOW!
1 = Nice Work! You’ve successfully saved up one year’s worth of expenses.
5 = You’re starting to pick up steam, keep up the good work.
0 = The ball is really rolling now. Your money is getting behind you every step of the way.
25 = Congratulations, you are now financially independent! You can now withdraw 4% annually from your investment, without ever touching the principal, to cover all of your expenses. You no longer have to work for money.
30 = Your investments are now out-earning your spending and continuing to grow. You could be building up a legacy to pass down to future generations.
>30 = You are long past worrying about money.
Now you have it - the new score that provides a good assessment of your current financial health.
My friend, not only must you take good care of your physical health, it is equally important to look after your financial health as well. Many years ago, my financial health was poor even though my physical health has been excellent. I had huge consumer debts that contributed to a negative net worth and my PF score would have been less than zero at that time. After going through many years of financial workouts to improve my financial fitness, my PF score now stands very healthy at 56.
How does your PF score look today? Remember, whatever your score is, start taking immediate action to improve your financial fitness. Don’t despair if you have a low or even a negative PF score now. I’m sure you’ll see your score improving over time with your persistent financial workouts.
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