Financial health check

Sophia Kafui TEYE

According to a recent survey by Gallup, nearly 8 in 10 Americans report that they had a routine exam in the past year. While this may not be a common practice in our part of the world as yet, many more Africans are coming to the awakening that their health is their wealth and hence, it requires a lot more attention.

We know the dire consequences we are likely to grapple with when we pay little or not enough attention to our health. Just as good physical and psychological health is important, so is good financial health. Like you go to the hospital now and then for a checkup to be sure your vitals are within the normal health range when was the last time you visited your “financial hospital” to measure your financial wellbeing?

Just as routine health checks are important due to the enormous benefits that come with them, so is keeping an eye on your financial wellbeing regularly. You may ask; what is a financial health check? A financial health check is a holistic review of your personal finances to ascertain your true state. Knowing your financial health helps you to better understand how you are managing your finances and whether you are on track to achieve your financial goals – and if not, where changes need to be made for a desired financial wellbeing.

The state of your financial health indicates your readiness to pay for things now and later, planned or unexpected. Factors like steady income, low debt-to-income ratio, and consistent retirement investments may indicate strong financial health for you.

Companies measure their financial health using financial ratios such as profitability ratios which measure the company’s overall ability to earn profits from its sales or operations, balance sheet assets, or shareholders’ equity; liquidity ratios measure the company’s ability to meet its current obligations as they fall due. Also, companies pay attention to their gearing to measure how much of their operations are funded using debt versus shareholders’ equity.

Companies keep an eye on certain ratios based on their stakeholders but as an individual, you need to define some parameters by which you can ascertain your financial health. This article seeks to emphasize the need for financial well-being, components of financial wellbeing, and how to become financially sound.

When should you check your financial health?

This is not something to do every day, but twice a year, set aside some time to take a really good look at your situation. The beginning of the year is always a good time to take stock. You should do a personal audit of yourself by listing all your assets and liabilities. When your liabilities outweigh your assets, it means you are in deficit which is indicative of poor financial health and when your audit reveals a surplus, it means you are managing your finances well and that surplus can be channeled into investments that can have the potential of increasing your financial independence.

Which aspect of your finances should you keep your eyes on?

When reviewing your finances, you should assess four thematic areas: expenses, savings, debt, and pension.


A wise man once said, “He who buys what he does not need, steals from himself.”

As humans, we consistently make decisions/choices that become our habits and these habits go a long way to affect our lives. Spending habits have driven many rich people to become paupers and many paupers into wealthy people. It is all about choices. When you are diagnosed with a medical condition, the physician will ask for lifestyle modifications; similarly, if you assess your financial health and you find out you are nowhere near a financially healthy person, you need to check your spending habits. Adjust your expenses and create buffers that can be channeled into investments.


Forming a positive saving habit is good and this comes with a lot of benefits. By saving money, you can avoid debt, which relieves you of stress. Saving money helps you to navigate complicated situations, meet financial obligations, and build wealth. Having enough savings will provide you with financial security and freedom. Having money set aside as savings come in handy during financial emergencies. In medical terms, we will call it financial immunity.


Being in debt is not a good sign of financial health. It means you owe people or institutions that require repayment of both interest and principal. Everyone at some point in life may be in debt but when the debt levels are higher than 40% of your income (Debt-to-Service Ratio), it affects your standard of living and if it is at a threshold that is on the borderline and is an indication that you need to modify your lifestyle to have good financial health.


There is a time and a season for everything. There is a time to attend school and there is a time to complete, a time to work and a time to retire from active work. Your age and health as well as statutory requirements would not permit you to work in perpetuity. Even life has an expiry date called death.

In ascertaining your financial health, it should not only be limited to the now but the future. Chances are that you are financially sound now because you are actively working. Can you sustain your lifestyle during retirement? Do you have a false sense of financial independence? If you are not financially prepared for your retirement, it means your financial health will deteriorate as you step out of retirement. So, check it. Ghana has a three-tier pension scheme: Tier 1 is for SSNIT; Tiers 2 and 3 are privately managed. When was the last time you checked your SSNIT and Tier 2 pensions? Can you estimate how much you are likely to accumulate when you retire?

How do you maintain good financial health?

Set financial goals

To be financially healthy and independent, you need to set financial goals for the short term, medium term and long term. Failure to do so will affect your financial health as years progress. Here are some goals you need to set: how much are you planning to retire with? How much are you willing to put aside every month? Where are you going to invest the money?

After setting financial goals, you need to adopt healthy financial habits to achieve your financial goals. Adopting healthy financial habits can take some discipline, but it gets easier once it becomes a habit.

Here are some ways you can maintain good financial health:

  • Keep an eye on your spending
  • Cancel subscriptions you don’t use
  • Pay off debt or personal loans
  • Pin down your financial goals
  • Transfer money into your investment account as soon as you are paid
  • Build up an emergency fund of at least three months’ earnings
  • Consider speaking to a financial adviser

What to do in a bad financial situation

If you find yourself in a difficult situation, it’s important not to bury your head in the sand. But neither should you panic as help is out there. There can be a turnaround if you choose to work on your financial health by using the tips below;

  • Have a budget in place to regulate your spending
  • Write down your financial commitments in order of priority
  • Think about your spending – is there anything you can cut back on?
  • Try to avoid debts, when necessary, especially when they are not for investment (financial or real) purposes.
  • If you are already in debt, renegotiate your credit terms.
  • It’s never too early to start planning for your future. Take your financial health check and that will help you to understand your needs, and help you achieve your financial plan.
  • Identify what areas of your financial health need more attention
  • Know your financial goals for future planning

In conclusion, while you keep an eye on your health by checking your blood pressure, glucose level, organ functions, lipid levels and other vitals as far as human health is concerned, you need to check your financial health. It is equally important because sound financial health has an impact on your physical health. Stress is reduced drastically if you have fewer financial burdens. Your health is important so check it, but don’t forget to check your financial health. It comes with a lot of benefits.

>>>the writer is the author of the underlisted books;

  1. Start Right: A Guide to Financial Investments in Ghana
  2. Overcoming Infertility: What to do When Childbirth Delays
  3. Contemporary Parenting
  4. Stepping up Your Life

She can be reached on [email protected]

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