This can be calculated in a lot of ways.

Are your finances in the red?
Do you have savings?
Maybe some investments?
Lingering debts?

If you went for a [loan](https://leofinance.io/posts/@leoglossary/leoglossary-loans) today would the bank see you as a good loan or a liability?

 https://images.hive.blog/DQmTug33bV8tr6Z4ZCKcuoceovjqMXeTb6mbjMbVK9QAdcb/image.png 

According to [Forbes](https://www.forbes.com/advisor/banking/savings/how-much-to-have-in-savings/) *Having money tucked away for emergencies can provide peace of mind if an unplanned expense arises. Financial experts often recommend maintaining savings equal to three to six months’ worth of expenses—but is that enough? Is it too much?*

And when does this turn into too much [money](https://leofinance.io/posts/@leoglossary/leoglossary-money) sitting in your [savings account?](https://leofinance.io/posts/@leoglossary/leoglossary-savings-account). There is no point in keeping 3 to six years worth of wages sitting in the bank as the money is deflationary and losing value every year. Money sitting still is money losing value.

So are your finances in a good place??

Life is expensive at the moment and  having your finances in a good place is vital. To me this is accomplished by having a few things in place.

-  A solid budget.
-  A surplus at the end of every month.
-  Savings to cover any foreseeable events.
-  A long term goal to invest your extra funds.

A budget is vital in one form or another. It doesn't have to an item by item list of costs but if your earning $2,000 per month then you need to know how much of this you need for monthly expenses, how much of it your willing to spend on other items and how much you can save every month. When my wages were a lot lower and i was saving for a house i took the hard work out of it. I set up a direct debit for the start of every month for $500. This meant that i never had a chance to spend it and planned my month without this money. That was $6 in savings every year and after four years i had enough to put a deposit on a house and get a mortgage for the purchase.

Every month then I really started with $1500, took out my rent of $400 and had $1100 for everything else. It was tight at times but because i had a plan in place and a good budget for the month i grew accustomed to living off $100 every month and just worked around it. Even at that i could still save a bit more in my current [account](https://leofinance.io/posts/@leoglossary/leoglossary-account) every month for bigger expenses like a holiday without affecting my savings and future plans.

Simple but effective.

This leads into having a surplus every month which is vital if you want to have secure finances. If your spending more than you have coming in then you are doomed to fail. You will never have money to invest and even worse will find yourself in debt which is very expensive to break out of. The reason that you can get a loan or a [credit](https://leofinance.io/posts/@leoglossary/leoglossary-credit) card isn't for your own good. It's for a company to make money form you. If you are getting credit then you are paying for it and will need to create a monthly surplus at some stage or sink into serious [debt](https://leofinance.io/posts/@leoglossary/leoglossary-debt) and a lifetime of bad finances.

It sounds simple but according to [Finder.com](https://www.finder.com/uk/saving-statistics)
>In 2023, almost a quarter (23%) of Brits have no savings at all, rising from 20% in 2022. 
50% of Brits have £1000 or less in savings. 
Around 27 million Brits (51%) would not be able to live off their savings for more than one month. 
A third (32%) of gen X have no savings at all, more than any other generation. 
Gen Z had the biggest increase in the number of people with no savings, going from 12% in 2022 to 22% in 2023.

Scary stuff when you look at it.

Save, save, save!!!

 https://images.hive.blog/DQmaLC9ykoSus6Yu5UoVWMg2GHy8f2ej6HQWDsXeZ4TUGdo/image.png 

So when you create that surplus, the first thing to do is build a nice savings buffer. It doesn't matter how much you can save every month as long as you are saving it. We never know what life will throw at you and if the car breaks down, you have an accident, you get a larger than expected [payment](https://leofinance.io/posts/@leoglossary/leoglossary-payment)you need to have money to pay it or else borrow the funds. 3 to 6 months wages is recommended but as you can see form above it is not always done.

And if you want to move forward in life then creating passive income will be the key. This comes from [investments](https://leofinance.io/posts/@leoglossary/leoglossary-investment). Money standing still only loses value so when you have your six months saving stocked up or whether number that you are happy with then anything over that can be put to work. Find places where it can earn a nice return. If it's a lot of money that could be property or land. If it's smaller amounts there are [stocks](https://leofinance.io/posts/@leoglossary/leoglossary-stocks) or [cryptocurrency](https://leofinance.io/posts/@leoglossary/cryptocurrency) that you can dollar cost average into.

Options for every level of investor. 

Your finances might not be in the best shape as we stand right now and it's not as easy to earn money in every country but your finances are always in your own hands.

Either by earning more or spending less. If you have a proper plan and budget for your money you can build that all important monthly surplus. Build up some savings for a rainy day and take the pressure off. Then when you get into a more comfortable position it is time to put the extra funds to work.

Money has always made money as there are lots of opportunities out there for profit. The difference is who is able to take these opportunities and who isn't. It all starts with personal finances and moves onto investment strategy. 

Take control of your life now and reap the benefits in years to come. It's easy to sit back and complain about what others have but it's not that difficult to begin your journey towards a better and more secure lifestyle. Cut out what doesn't add to that plan and work towards what does.

Finances will vary from place to place but making good choices doesn't. Earn, save, grow your finances. Avoid debt and put that money to work. It's the way forward.



Posted Using [LeoFinance Alpha](https://leofinance.io/@niallon11/are-your-finances-in-a-good-or-a-bad-place)