Financial health is not measured by how much you earn. It is measured by what you do with what you earn. There are people with high salaries who run out of money every month and people with modest incomes who save consistently, have a buffer for unexpected events and sleep soundly. The difference lies in habits and structure, not in the salary figure.
Before going into detail, check where you stand right now. The test takes less than a minute and gives you a score out of 100 with the specific areas you need to work on.
If you already have your result, what follows explains exactly what lies behind each sign, what threshold makes the difference and where to start if you are not meeting it.
What is financial health
Financial health is the state in which your personal finances are structured so that you can cover your current needs, absorb unexpected events without entering a crisis and move towards your future goals without money being a constant source of stress.
It is not a synonym for wealth. A person can be financially healthy on a salary of 1,500 euros a month if they have their expenses under control, an emergency fund and a saving habit. And they can be financially fragile on 4,000 euros a month if they spend more than they earn, have no reserves and depend on credit to get through the month.
The five signs that follow are the most reliable indicators of where you actually stand.
Sign 1: you have an emergency fund covering at least 3 months
The threshold: you have saved in a separate account an amount equivalent to at least 3 months of your monthly fixed expenses, and you do not touch that money for anything that is not a genuine emergency.
This is the protection sign. Without an emergency fund, any unexpected event, a car breakdown, an unexpected medical bill, a month without income, can trigger a debt spiral that takes months to resolve. With one, the unexpected event remains uncomfortable but stops being a crisis.
If your fixed expenses add up to 1,500 dollars a month, your minimum fund should be 4,500 dollars. If they add up to 2,500 dollars, the minimum is 7,500 dollars. The ideal goal is to have 6 months covered, especially if you are self-employed, a freelancer or have variable income. You can calculate your exact figure in our guide on what an emergency fund is and how much you should have.
You are not meeting it if: you do not have that money set aside, if it is mixed with your regular current account or if you have used it recently for things that were not genuine emergencies.
Sign 2: your fixed expenses do not exceed 60% of your income
The threshold: the sum of all your monthly fixed commitments, rent, mortgage, insurance, loans, subscriptions, fees, does not exceed 60% of your net income.
This is the healthy structure sign. When your fixed expenses consume more than 60% of what you earn, your real room for manoeuvre is so small that any variation in variable expenses or any unexpected event puts you in difficulty. There is no space to save, to enjoy or to react.
The calculation is simple: add up all your monthly fixed payments and divide by your net income. If the result exceeds 0.60, your fixed expenses are disproportionate relative to your income. The solution is not always easy — it may involve renegotiating rent, cancelling subscriptions or refinancing loans — but identifying the problem is the first step.
If your fixed expenses are between 50% and 60%, you are in an acceptable zone but with little margin. Below 50% is the ideal situation according to the 50/30/20 method.
You are not meeting it if: your fixed commitments exceed 60% of your net salary and you do not have a concrete plan to reduce them.
Sign 3: you save before spending, not with what is left over
The threshold: on the same day you receive your salary, you set aside a fixed amount for saving before spending on anything else. That amount is at least 10% of your net income.
This is the habit sign. The difference between saving with what is left at the end of the month and setting saving aside on payday is not just psychological: it is structural. Whoever waits to see what is left over usually saves nothing, because variable expenses always tend to expand to fill the available space. Whoever sets aside first adapts to the rest.
10% is the minimum that personal finance experts consider a real saving habit. On a net salary of 2,000 dollars, that is 200 dollars a month. It does not seem like much, but 200 dollars a month over 10 years, without counting any return, is 24,000 dollars. With compound return, considerably more.
If you cannot reach 10% right now, start with the percentage you can realistically maintain: 3% or 5% is infinitely better than zero. The important thing is that the transfer is automatic and happens before the money is available to spend. See how in the article on automatic saving.
You are not meeting it if: you only save when something is left over at the end of the month, or if some months you save nothing because the money has already been spent.
Sign 4: you do not depend on credit to get through the month
The threshold: you do not use a credit card, overdrafts or any type of financing to cover everyday expenses such as groceries, transport, leisure or household bills.
This is the solvency sign. Using credit for one-off high-value purchases that you pay in full at the end of the month, or to take advantage of rewards programmes, is a smart use of credit. Using a card at the supermarket because you cannot make it to the end of the month, or paying the minimum each month while accumulating 20% annual interest, is a sign that expenses structurally exceed income.
Consumer debt, especially high-interest credit card debt, is one of the biggest destroyers of long-term financial health. If you have active consumer debt, calculating how much you pay each month in interest alone can be revealing: that money could be going into your emergency fund instead.
You are not meeting it if: at the end of the month there are everyday expenses left uncovered that you carry over to the following month through credit, overdraft or payment deferral.
Sign 5: you know exactly where your money goes every month
The threshold: you can say, without checking anything, roughly how much you spend each month in your main spending categories, and when you review your bank transactions there are no significant surprises you cannot explain.
This is the control sign. It is not about memorising every receipt, but about having a clear and current picture of your money flow. When someone does not know where their money goes, it is not because they do not have enough: it is because they have no visibility over it. And without visibility there are no conscious decisions, only reactions.
Keeping a spending record, even a basic one, fundamentally changes the relationship with money. People who track their spending make more deliberate decisions, detect problematic spending patterns earlier and have a greater sense of control over their financial situation. You do not need to categorise every cent: knowing what the main blocks of spending are (housing, food, transport, leisure, saving) gives you enough visibility to act.
You are not meeting it if: at the end of the month you cannot explain where several hundred dollars went, or if your account balance surprises you because you did not expect to have spent it all.
How to interpret your result
Count how many signs you are meeting and read the corresponding interpretation:
5 out of 5: your financial health is solid. You have a well-built foundation. The next step is to optimise: review whether you can increase your saving percentage, improve the return on your emergency fund or start planning longer-term goals.
3 or 4 out of 5: you have a reasonable base but with clear weak points. Identify which sign or signs you are not meeting and work on them as a priority. The most common failures are sign 1 (emergency fund) or sign 3 (save first), which are the easiest to correct through habits.
1 or 2 out of 5: your financial situation is fragile. That does not mean it is badly managed: it may simply mean you are in a building phase or that your current income is low. The key is to prioritise: first sign 4 (break free from credit dependence), then sign 5 (visibility), and from there build the rest.
0 out of 5: there is a structural problem that needs urgent attention. The first step is to gain full visibility over income and expenses, and the second is to identify whether the problem is insufficient income or uncontrolled spending, because the solution is different in each case.
Where to start if you are not meeting a sign
Order matters. There is no point trying to build an emergency fund if you first have no visibility over your expenses. And there is no point worrying about your saving percentage if you depend on credit to get through the month.
The recommended order is: first sign 5 (gain control and visibility), then sign 4 (eliminate credit dependence), then sign 2 (check that fixed expenses are not strangling the budget), then sign 1 (build the emergency fund) and finally sign 3 (automate saving as a permanent habit).
If you want to start from the beginning, our guide on how to track your expenses efficiently gives you the starting point for gaining visibility. Once you know where the money goes, you can learn how to make a personal budget step by step to structure your finances. And if you want a concrete method for distributing your income, the 50/30/20 method is the most recommended starting point.
