Yusra3
VIP Contributor
Personal Finance is a big part of the financial world, and it can be overwhelming to try to keep track of all the different ratios and numbers that you need to know.
But there are some key ratios that can help you make smart decisions about your finances, so we've put together this list of the most useful personal finance ratios.
1. Debt To Income Ratio (DTI)
This ratio tells you how much income you have compared to your debt obligations. The lower your DTI ratio, the better! The formula is: Total Debt / Total Income minus 50%.
2. Cash flow
The amount of money coming in each month, compared to what goes out each month whether that means paying bills or buying groceries or paying off debt or saving up for something big down the road (like buying a house). This ratio will give you an idea of whether or not there are any holes in your budgeting process and if there are, then maybe it's time for some changes!
3. Net Worth
This is basically your total assets minus total liabilities (like credit cards). This can help give you an idea of how much money is available for savings and investments
and whether or not those investments are making sense for your financial situation!
4. Savings Rate (S) - Savings Rate (R)*100
This ratio compares savings rates between two different people: one who saves 100% percent of every dollar they earn while another who saves nothing at all! If one person has a high savings rate while the other has a low savings rate, then clearly there's something wrong with their respective financial approaches!
But there are some key ratios that can help you make smart decisions about your finances, so we've put together this list of the most useful personal finance ratios.
1. Debt To Income Ratio (DTI)
This ratio tells you how much income you have compared to your debt obligations. The lower your DTI ratio, the better! The formula is: Total Debt / Total Income minus 50%.
2. Cash flow
The amount of money coming in each month, compared to what goes out each month whether that means paying bills or buying groceries or paying off debt or saving up for something big down the road (like buying a house). This ratio will give you an idea of whether or not there are any holes in your budgeting process and if there are, then maybe it's time for some changes!
3. Net Worth
This is basically your total assets minus total liabilities (like credit cards). This can help give you an idea of how much money is available for savings and investments
and whether or not those investments are making sense for your financial situation!
4. Savings Rate (S) - Savings Rate (R)*100
This ratio compares savings rates between two different people: one who saves 100% percent of every dollar they earn while another who saves nothing at all! If one person has a high savings rate while the other has a low savings rate, then clearly there's something wrong with their respective financial approaches!
