A simple way to take stock of our financial health

Published: June 27, 2016 at 1:44 pm

Last Updated on

Financial health refers to ‘where we stand today’ with respect to our finances and what we need to do in the coming years to handle future expenses and financial goals.

In this post, I would like to describe a simple exercise to assess our personal financial health. This process can be automated with the integrated financial planning template.

The process in which expenses, investment amount needed for financial goals, along with expected salary are projected into the future was a pivotal exercise in my financial learning curve.

The idea is to create a table with the following entries:

  • We take our current salary and project it in future with some reasonable growth rate.
  • Do the same with current expenses with an assumed inflation rate
  • Determine the total investment amount required for all out goals and if possible  increase it at some rate for the coming years.
  • Determine the amount that we can invest each month – now and in future (increased or decreased at some rate).
  • Consider any current and future liabilities.

We might end up with something like this. This is a screenshot from the above-mentioned financial planning template.

click to enlarge. 

The red cells are those years when we will be investing less than required  for our goals.  If there are too many red cells, then goal priorities and inputs may have to be altered.

This exercise can be a confidence booster for a few and scary for many – including me.

Hate ads but would like to support the site? Subscribe to our ad-free newsletter and get beautifully formatted full articles delivered to your inbox!
  1. This is only a projection with assumed inputs. The future can turn out better (or ..) than this.
  2. If we keep out head down and invest systematically with a solid strategy in place, with a bit of luck, and in time, the number of red cells may come down.
  3. I did not lose sight of this hope when I first did this exercise 6 years ago, and I would urge you to do the same.
  4. Like any other goal-planning exercise, it is  important to do this assessment once a year.
  5. In some cases, the red cells (inability to invest enough) can be reduced with small changes in lifestyle.

After I did this exercise, I had a clear idea of where I stand and what I can hope for in future. To be frank, I was disappointed that a couple of my wants could not be accommodated after accounting for my needs. Well, we can’t have everything, can we? 

Use the freefincal robo advisory template 


Download the Integrated Financial Planning Template


Do share if you found this useful
Hate ads but would like to support the site? Subscribe to our ad-free newsletter and get beautifully formatted full articles delivered to your inbox!

About the Author M Pattabiraman author of freefincal.comM. Pattabiraman(PhD) is the author and owner of freefincal.com.  He is an associate professor at the Indian Institute of Technology, Madras since Aug 2006. Pattu” as he is popularly known, has co-authored two print-books, You can be rich too with goal based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management.  He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. Pattu publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year (2.5 million page views) with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis. He conducts free money management sessions for corporates  and associations(see details below). Previous engagements include World Bank, RBI, BHEL, Asian Paints, TamilNadu Investors Association etc. Contact information: freefincal {at} Gmail {dot} com (sponsored posts or paid collaborations will not be entertained)
Want to conduct a sales-free "basics of money management" session in your office?
I conduct free seminars to employees or societies. Only the very basics and getting-started steps are discussed (no scary math):For example: How to define financial goals, how to save tax with a clear goal in mind; How to use a credit card for maximum benefit; When to buy a house; How to start investing; where to invest; how to invest for and after retirement etc. depending on the audience. If you are interested, you can contact me: freefincal [at] Gmail [dot] com. I can do the talk via conferencing software, so there is no cost for your company. If you want me to travel, you need to cover my airfare (I live in Chennai)

Connect with us on social media

Content Policy

Freefincal has original unbiased, conflict-of-interest-free,  topical reports, reviews, commentary and analysis on all aspects of personal finance like mutual funds, stocks, insurance etc. All guest authors and contributors to the site also do not have any conflict of interest. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one. No promotional content We do not accept sponsored posts and link exchange requests from content writers and agencies. This is our privacy policy Our website is non-profit in nature. The revenue from the advertisement will only be used for hosting charges, domain registration charges, specific plugins necessary for traffic growth and analytics services for search engine optimisation.

Do check out my books

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingMy first book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.  It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You WantGamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantMy second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earner

The ultimate guide to travel by Pranav Surya

Travel-Training-Kit-Cover This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step.  Get the pdf for ₹199 (instant download)

Free Apps for your Android Phone

All calculators from our book, “You can be Rich Too” are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)

Blog Comment Policy

Your thoughts are vital to the health of this blog and are the driving force behind the analysis and calculators that you see here. We welcome criticism and differing opinions. I will do my very best to respond to all comments asap. Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.


  1. Thank you for this post. I am using something similar for the last 5+ years to track where I am. However I have added another “feature” by which I try to gauge how much insurance cover is required. I come up with the amount by doing a NPV of all the future expenses and reducing this number by the current assets. In my mind this is the delta that needs to be filled by my insurance cover. This will take care of all the future expenses, goals and maintain the standard of living. As I do this calculation for each year, I can also see a trend on when my insurance cover reduces (as I achieve goals, meet or beat my savings target for the year) to a point when I no longer need a insurance cover. Please let me know your thoughts.

Leave a Reply

Your email address will not be published. Required fields are marked *