Bible Money Matters

Christian personal finance

Menu
    • About
    • Archives
    • Contact
    • Close
  • Making Money
      • Popular Articles

        • 50 Ways To Make Money: Maximizing, Creating And Increasing Your Income
        • 10 Weird And Unconventional Ways To Make Money
        • Making Money With A Blog (e-Book)
        • 10 Places To Sell Or Trade Your Unused (Or Broken) Electronics
        • Ways To Make Extra Money Series: 20 More Income Generating Ideas From Our Readers
        • Making Side Income Can Help Blunt The Impact Of Becoming A One Income Family
        • Earn Cash Back With Discover it® Credit Card
      • Recent Articles – Making Money

        • Best Sites Like Fiverr To Make Money As A Freelancer
        • 13 Of The Best Independent Contractor Jobs
        • 25 Of The Best Gig Economy Jobs
        • How To Make Money Blogging: Turn A Blog Into A Business
      • Categories

        • Making Money
        • Investing
        • Retirement
        • Jobs & Work LIfe
        • Money
        • Income
    • Close
  • Saving Money
      • Popular Articles

        • 50 Easy Ways To Save Money Every Month
        • 10 Weird And Unconventional Ways To Save Money
        • 10 Practical Ways To Save Money And Increase Your Net Worth
        • How To Save Money On Just About All Of Your Regular Monthly Bills
        • Ways To Watch TV Without Paying An Arm And A Leg For Cable TV
        • Save Money On Your Hospital Bill - Just By Asking
      • Recent Articles – Saving Money

        • How To Save $100k In 7 Practical Steps
        • Stairs App Review: Save And Invest To Earn 4-6% Interest
        • Honey Review: Save Money Automatically When You Shop Online
        • 9 Convincing Reasons Why You Need An Emergency Fund
      • Categories

        • Saving Money
        • Frugality
        • Planning
        • Finance
        • Saving For Retirement
        • Savings Accounts
    • Close
  • Banking
      • Best Rates For 2019

        • Best Credit Cards
        • Best Savings Accounts
        • Best Mortgage Rates
        • Best CD Rates
        • Best Brokerages
        • Free Credit Scores
      • Recent Reviews

        • TradeStation Review: Commission Free Stock And ETF Trades
        • Firstrade Review: Commission Free Trades on Stocks, Crypto, And Options
        • Cadre Real Estate Investing Review: Commercial Real Estate Investing
        • Axos Self Directed Trading Review: Invest, Trade Stocks For Free
      • Categories

        • Bank & Software Reviews
        • Investing
        • Credit
        • Banking
        • Mortgage
        • Insurance
        • Family Budget
    • Close
  • Recommended
  • Video
    • Close

15 Numbers You Need To Know To Make Smart Financial Decisions

By Peter Anderson 1 Comment - The content of this website often contains affiliate links and I may be compensated if you buy through those links (at no cost to you!). Learn more about how we make money. Last edited January 5, 2015.

Share40
Pin14
Tweet46
Share8
108 Shares

Over the weekend I was reading an article in the Wall Street Journal that talked about 15 key numbers to know in order to make smart financial decisions and ensure your financial future.

The numbers they thought you should know included numbers related to investing, taxes, debt, financial planning and credit.  Some of the numbers were pretty obvious I thought, but others may not be something you’d think about right off the bat.

Just for fun I thought I’d go through their 15 numbers, and talk briefly about why they believe they’re important to know.

15-numbers-you-need-to-know

15 Important Numbers To Know

So what are the 15 important numbers that everyone should know? Let’s break them down by category.

Investing

If you want to ensure a good financial future, you need to pay close attention to your investments, and how much you’re paying to invest. Here are 5 key numbers to know in investing.

  • Percentage of Your Savings in Stocks: While there isn’t really a set answer as to how much of your savings should be in stocks, you should at the very least know how much risk that you’re taking. Your percentage of stocks will depend a lot on your age and risk tolerance, but one rule of thumb is to have your age in stocks, while another is to have twice your maximum tolerable loss in stocks. (25% loss is the max, only 50% or less in stocks).
  • Maximum 401(k) Contribution: If you have a workplace 401(k) plan and you’re not contributing to the max, you may want to think about increasing your contributions. For 2015 the max you can contribute to a 401(k) is $18,000, while for a Roth IRA the max is $5,500.  Why should you increase your contributions? According to Fidelity Investments the typical worker earning $75,000 and assuming a 7% return over 35 years will earn $365,000 more if they increase their contributions to 10% from 8%.  Small changes can mean big returns!
  • Price/Earnings Ratio of Stocks: To figure out if it’s a good time to buy stocks, you can figure out what the average price/earnings ratio of the stocks in the benchmark indexes is.  For example, according to the Wall Street Journal in January 2015, P/E of the S&P 500 recently sat at 19.73, which was below the average of the past 20 years of 22.47 (but higher than historical average of 16.92 since 1936).
  • Average Yield on Bonds: Bonds typically deliver far more predictable returns than stocks, and as such are a good source of safety for most investors in their portfolios. It can be difficult to predict bond returns in the short term, but historically if you look at the current yield of bonds and bond funds, it will give you a good indication of what long term returns will be.
  • Average Expenses of Your Funds: An individual investor can’t control what the market does to their portfolio, but there are things that they can control. For example, the expenses they’re paying for their investments. Know what your expenses are and do your best to keep costs low. For me that means investing in low cost index funds that don’t have a lot of fees.  Take a look at what your expenses are in your portfolio by signing up and using a service like Empower and their investment checkup tools.  Another great place to check what your expenses are is investment site FeeX.

Taxes

Knowing just how much you make, and what your state’s tax laws are, can be key to your financial well being.  Here are 2 key numbers you should know.

  • Adjusted Gross Income: Your AGI can have a big impact on which tax deductions and credits you are eligible to claim. You can find your AGI from the bottom of the first page of your Form 1040 tax return. If you find your income is close to a certain threshold for you to be eligible for a certain tax credit, you can do things to reduce your taxable income, like boosting contributions to your 401(k).
  • Your State’s Estate-Tax Exemption Amount: If you’re closer to retirement and end of life planning, you may want to figure out what your state’s estate tax exemption amount is.  The federal estate tax is due at more than 5 million dollars per individual taxpayer, or 10 million for couples.  But many states have much smaller exemption amounts, for example New Jersey has a $675,000 estate tax exemption.  If you find you’re near or above that limit you can do things to reduce the estate before you pass, including giving gifts to family members and charity. If you don’t, you could be hit with a estate tax bill of up to 20% (source).

Planning

Not only do you have to plan for your investments and taxes, but other day to day numbers are important to know. For example, these 5 planning numbers.

  • Your Fixed Living Expenses: You need to get a firm grasp on what your regular recurring expenses are.  It is important for retirement planning, for saving up a large enough emergency fund and for figuring out if there needs to be cuts made to your budget.  Most advisers are going to recommend that once you figure out what your regular expenses are, that you save up an emergency fund that is equal to 6-8 months of expense, or even more if you’re particularly risk averse.
  • Yearly Health-Care Bill: Some health care costs like your insurance premiums can be relatively predictable, while others like your how much of your deductible you end up paying can vary quite a bit from year to year.   Take a look back at your spending in previous years and figure out just how much you believe you’ll spend in the coming year. Also factor in which type of plan will be a better deal for your family.  A higher premium policy with lower deductibles, or a lower cost plan that has you paying more before coverage kicks in.
  • Cost to Rebuild Your Home:  Know what your cost to rebuild your home would be, and it isn’t necessarily what your home would sell for. In many cases it’s much less than a sales price once you figure in the cost of the land (which you wouldn’t need to rebuild).  The only caveat might be if you have an older home with lots of architectural detail that would be hard and/or expensive to replace.  Talk with an insurance agent and/or a local construction contractor to get an estimate of what it might cost to rebuild. For us, we just built our house last year so we have almost an exact estimate of what it would be to replace and rebuild the house.
  • Price-to-Rent Ratio: If you’re buying your first home or getting ready to downsize, it’s good to know what the price-to-rent ratio is for your area.  To figure that out you would just figure out the average home sale price for your area, and then divide it by the cost of renting a similar property for the year. If the resulting number is less than 20, buying is probably a better option according to some experts.  For my area the average sales price was $306,220, and the average rent for the year was $17,568.  So that comes out to a price to rent ratio of 17.431.
  • Life Expectancy: How long you can expect to live will affect all sorts of decisions you make including how you invest, how much you withdraw in retirement, long term care and more.  Figure out what your life expectancy might be using an online calculator like “The Living To 100” life expectancy calculator.  Mine wasn’t exactly encouraging at 80 years old, but I know that could improve with some weight loss and exercise added to my regimen.

Debt

Another important area to know your numbers in is the area of debt.  The 3 most important include:

  • Your Monthly Debt Service: You should know what you spend every month on any debt you have such as a mortgage, auto or student loans, credit cards and so on.  If more than half your paycheck is disappearing towards debt service every month, you may have problems. A higher level of debt means it’s a lot harder to reach your financial goals.  Do your best to reduce the debt where you can by paying off higher interest debt like credit cards, and using a debt repayment plan that fits your needs.
  • Your Mortgage Interest Rate: Your mortgage payment is one of those debts that it can be easy to put on auto-pilot and forget about – even though it’s one of your largest monthly bills.  Know what your mortgage interest rate is, because it may be too high! You may want to consider refinancing your mortgage into a lower rate, especially if you can drop your rate by at least 1 percentage point.
  • Your FICO Credit Score: Your credit score can have a big impact on  how much you’ll pay in interest on your next loan.  For example, a good credit score versus a bad credit score can mean hundreds of dollars on your monthly mortgage payment, and thousands of dollars extra paid over the life of the loan.  To stay on top of your credit score you can check one of the equivalent credit scores at sites like Credit Karma, Credit Sesame or Quizzle, or pay a small fee to get your actual FICO score.  Details about how to get your credit score for free here.

So those are 15 of the most important numbers to know in order to make sound financial decisions, according to the Wall Street Journal.

What numbers would you say are important to know, beyond the ones listed above?  Which of the above do you think are the most important?

Related Posts

  • You Shouldn't Make Your Financial Decisions Based On Financial Gurus' Advice

    Don't take financial gurus' advice as a one-size-fits all approach to your finances. Your situation is unique and may need a custom tailored approach.

  • Financial Crisis: First Foreclosure, Now Credit Cards?

    The next big crisis? The past year has been a tough one for our economy.  We have seen the companies suffer as the mortgage industry…

  • PerkStreet Financial Free Online Checking: A Good Credit Card Alternative With 2% Cash Back

    If you've read this blog for any period of time you'll probably know I'm not a huge fan of the big credit card companies. They…

Share40
Pin14
Tweet46
Share8
108 Shares
Last Edited: 5th January 2015 The content of biblemoneymatters.com is for general information purposes only and does not constitute professional advice. Visitors to biblemoneymatters.com should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.

This article is about: Credit, Investing, Planning, Retirement

About Peter Anderson

Peter Anderson is a Christian, husband to his beautiful wife Maria, and father to his 2 children. He loves reading and writing about personal finance, and also enjoys a good board game every now and again. You can find out more about him on the about page. Don't forget to say hi on Pinterest, Twitter or Facebook!

Comments

    Share Your Thoughts: Cancel reply

  1. Mike says

    So I admit kinda off topic but I would suggest cholesterol number. Only because paying for poor health can have a huge, negative impact on your financial well-being. Stay healthy. It can save you not just thousands of dollars, but lots of stress.

    Reply
Previous Post: Frugal Fitness: Working Out At Home Instead Of At The Gym
Next Post: 7 Important Uses For Crude Oil And Why It Matters
Discover Investment Platforms

Popular Posts

  • 21 Easy Ways To Earn Free Amazon Gift Cards
  • 10 Best Free Tax Filing Services And Software Online
  • 21 Apps That Pay You Real Money Fast
  • 17 TV Apps And Live TV Streaming Services To Watch TV Free
  • 30 Legit Online Jobs That Pay Well
  • 37 Easy Ways To Get Free Gift Cards
  • How To Get Free Stock
  • 40 Easy Ways To Get Free Money Fast
  • 21 Places To Read Free Books Online
  • 24 Legit Online Jobs
  • 17 Best Work From Home Jobs: A List Of Legit Online Jobs That Pay Well

Recent Posts

  • How To Save $100k In 7 Practical Steps
  • How to Save Money When Remodeling A Home
  • How To Hire A Contractor For Your Remodeling Project
  • Remembering 9/11 Years Later: Where Were You On That Fateful Day?
  • TradeStation Review: Commission Free Stock And ETF Trades
  • Firstrade Review: Commission Free Trades on Stocks, Crypto, And Options
  • Cadre Real Estate Investing Review: Commercial Real Estate Investing
  • Best Sites Like Fiverr To Make Money As A Freelancer
  • Axos Self Directed Trading Review: Invest, Trade Stocks For Free
  • 30 Quotes About Easter And Resurrection: He Is Risen!

Disclaimer

The information contained in BibleMoneyMatters.com is for general information or entertainment purposes only and does not constitute professional financial advice. Please contact an independent financial professional for advice regarding your specific situation.

In accordance with FTC guidelines, we state that we have a financial relationship with some of the companies mentioned in this website. This may include receiving access to free products and services for product and service reviews and giveaways.

Any references to third party products, rates, or websites are subject to change without notice. We do our best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers.

Amazon and the Amazon logo are trademarks of Amazon.com, Inc. or its affiliates.

We respect your privacy: Privacy Policy.

Thanks for visiting!

Bible Money Matters - Seen On These Sites and more..
Bible Money Matters is a personal finance, entrepreneurship and investing community. Give more, save more and live more.

Copyright © 2023 · Bible Money Matters | Sitemap | Advertise | Privacy Policy