> Posted by Allyse McGrath, Specialist, CFI

How financially healthy are you? Financial health is a relatively new term in the financial inclusion community, and aims to provide a model for assessing how well one’s daily financial systems enable a person or household to build resilience to shocks and pursue opportunities and dreams. Last month, CFI in collaboration with The Center for Financial Services Innovation (CFSI) and Dalberg’s Design Impact Group (DIG) launched the results of a year-long study into how to adapt CFSI’s U.S.-based financial health framework to a developing country, BoP context. The study found that the concept of financial health can be applied to lower-income people in emerging markets, though the indicators and measures of financial health in this context were different. We encourage you to check out the full report, Beyond Financial Inclusion: Financial Health as a Global Framework, to learn more about our financial health framework for the developing world.

We also encourage you to engage with your own financial health in order to get a better grasp on the concept. To better understand the concept ourselves, CFI and Accion staff (building on the work of our year-long study and on the U.S. Financial Health Framework of CFSI) recently participated in an organization-wide financial health survey. Over 120 Accionistas took the survey and received assessments of their financial health. After reviewing the responses, we have uncovered some interesting insights into how people’s debts evolve as they age and the diverse set of tools they are using to manage their financial lives.

As a next step in the process of understanding, we want to share this survey with you. We hope it will help you both engage with the concept of financial health and potentially improve your own financial health. We also hope your feedback will help us strengthen our framework and this tool.  Finally, we look forward to reporting back soon on the financial health of CFI’s (anonymous) blog readers!

You can find the survey here. Please note that it is completely anonymous and we will not collect any identifying information beyond your general location, gender, and age. After you have completed the survey, use the Financial Health Survey Guide to analyze and better understand your results.  As part of that guide, you will find a scoring sheet to understand the breakdown of your scores in the various categories of financial health as well as the following rules of thumb for financial health:

You are financially healthy when…

  • You spend less money than you make.
  • You have enough savings to cover 3 months-worth of expenses.
  • You can come up with $3000 to cover emergency expenses. This money could come from your savings, interest-free borrowing or the sale of assets.
  • You feel confident that you are on track to retire when you plan to.
  • You are paying no more than 30 percent of your monthly income towards outstanding debts.
  • Your credit score is good or you are actively taking steps to improve it.
  • Your financial planning horizon is longer than 1 year.
  • Your insurance policies provide you with enough cover in case of an emergency.

We hope you enjoy applying this concept close to home and look forward to your responses!

Have you read?

Dollar by Dollar or Goat by Goat: How Financial Health Translates Across Oceans

What Financial Health Means to Me

Measuring Financial Health: Not as Easy as It Looks