3 Financial Numbers Every Adult Needs to Know


        Today’s post is all about three of the most important financial numbers that we all should know about ourselves but most people don’t. Knowing these numbers can either make our lives easier or harder depending on what they are. What are these numbers you ask? Your credit score, your debt-to-income ratio, and your net worth. If you don't already know these numbers, now’s the time to learn. It may help save you time and money in the long run. 

1. Your Credit Score     

       I covered this topic extensively in three of my previous posts (see below). If you have time, I highly suggest reading them for a more detailed explanation.

    However, I will do a quick overview for folks.

    What is it? Your Credit Score is a numerical value used to rate your creditworthiness to potential lenders and/or creditors. Credit scores range from 300 to 850. A score over 700 is usually deemed to be good.

    Why you need to know your credit score: Lenders and creditors use the score to assess how likely you are to repay a loan or your credit balance, and how likely you are to do it in a timely manner. This means that lenders are more likely to offer you lower interest rates which then allows you to pay less money in interest over the course of the loan, thus saving you money! ← This is the whole point of striving to get and maintain a good credit score.

    How to get your credit score: There are several ways that you can get your score for free. You are entitled to a free copy of your credit report from Experian, Equifax, and TransUnion every year. You can do this by going to Annual Credit Report.com to request your report. For more ways to get your credit score for free, be sure to check out my post ‘Dude, What’s a Credit Score?’.


2. Your Debt-to-Income (DTI) Ratio

        What is it? Your Debt-to-Income ratio (or ‘DTI’ for short) is the total of your monthly debts compared to your gross monthly salary. Your gross monthly salary is what you make every month before taxes and other deductions are taken out. Your DTI usually refers to debt payments such as rent/mortgage, student loans, auto loans, personal loans, credit card minimum payments (i.e. what you must pay monthly not what you may actually pay) child support, and alimony. Things like food, utilities, and other miscellaneous expenses such as service subscriptions, etc. are not included when calculating your DTI.

        Why you need to know your credit score: Lenders use your DTI along with your credit score/credit history to determine the likelihood of you repaying a loan; however, it is important to point out that your DTI does not affect your credit score. Unlike credit scores, in which lenders widely rely on either the FICO Score or the Vantage Score to determine your creditworthiness, but when it comes to your DTI lenders they generally set their own requirements. This means one lender may accept a higher DTI compared to another lender. Typically, personal loan lenders are more likely to accept higher DTIs than mortgage lenders; most mortgage lenders prefer that your DTI is below 43%. However, higher DTI’s are, in general, viewed as riskier because it signals that you have too much debt compared to how much money you are making. According to NerdWallet, a debt-to-income ratio of 20% or less is considered low, while a DTI of 40% or more is considered a sign of financial stress by The Federal Reserve.
        How to calculate your DTI? To calculate your DTI, you’ll want to add up all of your debt payments laid-out in the ‘What is a DTI’ section above and divide that by your gross monthly income. This will give you a percentage. That percentage is your DTI. To break it down please refer to the example below.

    Person A has a gross monthly income of $4,000. Person A has the following monthly debt obligations.

  • Rent: $1,000
  • Car Loan: $400
  • Student Loan: $300
  • Credit Card Minimum Payment: $25

1000 + 400 + 300 + 25 = $1,725

$1,725 / $4,000 = 0.43 or 43% ← This would be Person A’s DTI.

    Person B has a gross monthly income of $5,000. Person B has the following monthly debt obligations.

  • Rent: $800
  • Car Loan: $250
  • Student Loan: $300
  • Credit Card Minimum Payment: $25

800 + 250 + 300 + 25 = $1,375

$1,375 / $5,000 = 0.27 or 27% ← This would be Person B’s DTI.

    If you find that your DTI is on the higher side there are ways to lower it.

    This could be done by bringing in more money or reducing/getting rid of debt.


3. Your Net Worth

        What is it? Your net worth is the total sum of your assets minus the total sum of your liabilities. Assets are anything of value that can be converted into cash. Examples of personal assets include real estate or other properties owned, checking accounts, savings accounts, retirement accounts, investments, and cars to name a few. Liabilities are debts that are owed. This usually refers to things like mortgages, student loans, car loans, personal loans, and credit card debit.

        Why you need to know your net worth: Knowing your net worth helps give you a better understanding of your overall financial situation. Your net worth can be a positive number or a negative number depending on your financial situation. If your current net worth is negative, don’t despair. It does not necessarily mean that you are financially irresponsible, it just means that you currently owe more than you own; this is typical for younger people. But knowing your net worth can provide you with the information needed to take control of your financial future. Knowing your liabilities can help you develop a plan to pay them off.

        How to calculate your net worth? Calculating your net worth is pretty simple. As stated above, your net worth is the sum of your assets minus the sum of your liabilities. You should know how to calculate or know how to access this information through your accounts. So, if you don’t currently know the figures for your assets and liabilities, I would suggest taking the time to find out. Below is an example of how to manually calculate your net worth or you can always use NerdWallet’s Net Worth Calculator. Either way, you will need to know your numbers to get an accurate number.

    Person A’s Assets

  • Checking Account = $800
  • Savings Account = $5,000
  • Retirement Account = $30,000
  • Real Estate = $0

    Total Assets = $35,800

Person A’s Liabilities

  • Student Loan = $15,000
  • Personal Loan = $500
  • Car Loan = $10,000
  • Credit Card Debt = $1,000

    Total Liabilities = $26,500

    Total Assets ($35,800) - Total Liabilities ($26,500) = Net Worth ($9,300) ← This would be Person         A’s Net Worth.

        Your net worth, just like the other two numbers, are not fixed. This means that they can and will change over time based on our actions.

        If your numbers aren’t currently where you’d like them to be, now is the time to make a plan on how to change that.


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  1. This post is giving me all the feels!!! I have an excellent credit score but I need to really work on building my savings and net worth. Living in New York just makes it so difficult to save. I have to make a way. Claiming it!

    Thanks for sharing.

    1. Thanks for your comment Rebekah! There's always time to work on increasing your net worth. Even making small changes to lower your expenses or reduce your debt will help your net worth increase.

    2. SDot,

      I think Bekah is giving you your next writing prompt.

      How to "pay yourself first" to make savings easier. Ramit Sethi refers to it as his "conscious spending plan", but it's a great way to flip the mindset of save first versus save whatever's left at the end of the month.

    3. I think you're right Seth! I'm a big advocator for Paying Yourself First. I've offered this advice on social media and may have briefly mentioned it in an earlier blog post on savings but I guess it never hurts to dedicate a post to it. :-)

  2. A really great resource! I check my credit scores and inquiries with each credit agency monthly . Thanks for sharing.

    1. Thanks for the feedback. I'm glad you found this to be useful! :-)

  3. This is a great post. I really need to take the time and study all these numbers. Thanks!

    1. Thanks for the comment Albert! Yes, please do. :-)

  4. this post has just open my eyes to reallity. i do not even have a list of my expenses or earnings which i should totally do. thanks for this information

    1. Thanks for the comment Nallely! You're not the only one but I'm glad this post help bring this to your attention.

  5. As it turns out, only know 1/3 haha. Thanks for sharing! Now I’ll be more of an adult.

    1. LOL 1 down just 2 more to go! At least you're almost there. Thanks for the comment!

  6. This is great information. I feel like a lot of people try to live in blissful ignorance - as if turning a blind eye to their current financial state will mean that everything will remain in order. However, the only way to take control of our finances and set ourselves up for success is to first identify and acknowledge where we are at today.

    1. Yesss Britt K! When I was younger I was under that impression. As long as my bills were paid I turned a blind-eye to the rest of my finances; thinking what I don't know can't hurt me. WRONG! lol What I didn't know was hurting me and my financial future. So glad I learned to change my mindset on my finances. Thanks for the comment! :-)

  7. Im still learning about finance and this information here is an eye opener. Very informative and clear. This will definitely help me alot

    1. Thanks Alina and good luck on your journey!

  8. Great post with very insightful information! Love learning about this to better my financial situation

  9. Super article, Sonya! I wish I had known all this when I was a teen. I didn't learn about FICO scores until I was over my head in credit card debt by the time I was 21. The minute I stepped on my college campus, I was bombarded with representatives encouraging me to sign up for credit cards in exchange for free t-shirts and stress balls. I had no idea what I was getting into. Thanks for educating us!


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