As you’ve probably noticed, financial wellness is all the rage. According to one survey, about 90% of large and mid-sized companies are now offering financial wellness programs as an employee benefit. But what exactly is “financial wellness” and are you financially well?

Financial wellness isn’t just about your income, your net worth, or even your credit score. As one of the pioneers of the industry, we define it as a state of being in which you

  • experience minimal financial stress,
  • have a strong financial foundation of consistently living with your means, having an adequate emergency fund, and having little or no high-interest debt,
  • and are on track to meet your future financial goals.

If you’re not fortunate enough to work for one of the growing number of companies that are now offering financial wellness programs that provide a free and comprehensive assessment of your financial wellness, here’s how you can quickly assess how you stack up:

How financially stressed are you? This is an easy place to start. If you’re stressed about being able to pay the bills or feel overwhelmed with debt, you’re probably not financially well. This stress can even impact your physical wellness and job performance.

Are you consistently living within your means? This is the foundation for the rest of your financial wellness. Living beyond your means can lead to growing debt while living below your means can provide the savings needed to meet your goals.

Don’t just estimate your expenses. Instead, go through your actual bank and credit card statements and record your expenses on a worksheet like this. (You may not know what you spent with cash but at least include whatever you withdrew.) You can also add in big non-monthly expenses like vacations and holidays by dividing how much you spend per year by 12 in order to turn it into a monthly amount. After you recover from the shock of seeing where your money is going, compare it to how much you’re taking home each month.

How much do you have in emergency savings? At the very least, an adequate emergency fund can reduce your financial stress. At best, it can keep you from going in debt or even losing your home.

Once you know how much you spend, you ideally want enough savings to keep your roof over your head, your car in the driveway, food on the table, and the lights on if you’re in between jobs for at least 3-6 months. (If your job is high-risk and/or you think it may take longer to find a new one, you might even want enough savings to cover 6-12 months of necessary expenses.) If you’re not there yet, start with a more achievable goal like $1-2k in savings and build from there. Finally, keep in mind that your emergency fund should be kept someplace safe and easily accessible like a bank account or money market fund, not invested in something that may be down in value or otherwise inaccessible when you need it.

Read the rest of Erick Carter’s article at Forbes