Take the test to find out the true state of your financial health. You may be pleasantly surprised – and if not, just two simple fixes can change that.

Just like a doctor would perform a health check by looking at some vital signs, you can perform your own wealth check using a few key measures.

And even if the prognosis looks initially bad, you can remedy the situation with two simple lifestyle changes.

But before we get into the salves, let’s identify the source of any sickness. This three-step health-of-wealth test will tell you whether your finances are strong or sick.

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List what you owe. These are called your liabilities.

  • Mortgage —————-
  • Personal loans ———-
  • Credit Cards ————
  • Store Finance ———–
  • Investment Loans ——
  • Other ——————–
  • TOTAL ——————

OK, that may be confronting, but it’s only one element of your financial health. Now you need to look at your assets to diagnose how robust it really is.

List what you own and their value. These are called your assets.

  • Home ———————
  • Car(s) ———————
  • Savings ——————-
  • Shares ——————–
  • Managed Funds ———
  • Investment Properties —
  • Other ———————
  • TOTAL ——————-

Now for the moment truth. Calculate your overall financial well-being.

Your health-of-wealth test results. This is your net worth.

  • Total Assets ——————————
  • Total Liabilities ————————–
  • Assets Minus Liabilities —————-
  • Net Worth ——————————-

The big question is whether your final number is positive, close to zero, or negative.

Big kudos if it’s positive, meaning you owe less than you own. But is the number big enough to get you where you want to go? The idea over your lifetime is to grow net worth sufficiently to realise your hopes and dreams.

But what equals “rich” these days? There’s a lot of talk about needing $1 million – or more – in superannuation to afford a comfy retirement.

I believe “rich” means amassing enough money to hit the big life target you’ve chosen, how and when you want to. These should include funding a nice retirement from money both in and out of super.

That is true financial help and well-being.

If your health-of-wealth test results are negative, your finances need urgent rehabilitation. It’s possible you have a problem with debt that you need to make your top priority. It’s also possible you’ve made some dubious purchases. And you may have borrowed either for an asset that was immediately worth less than you would have paid for it, such as a car, or something experiential, such as a holiday.

Avoid both, although the latter is much the worse transgression.

  • Other ———————
  • TOTAL ——————-

Now for the moment truth. Calculate your overall financial well-being.

Which brings me back to my first prescription for good wealth.


Do this, and not only your financial position get stronger each day but your requirement for income will also, eventually, fall dramatically.

Besides, for any investment to work out better than simply paying off a mortgage, a higher-rate taxpayer would need nearly 10 per cent annual return. And you don’t do that without taking on a fair amount of risk.

But what about a bit of “smart” investment debt? There can be valid arguments for a little “geared” investment. For higher-rate taxpayers in particular, it can be tax-effective and a good way to make the most of your money. Never forget – borrowing magnifies both gains and losses.

Irrespective of tax benefits, you should only ever invest in something that you believe is sound and will ultimately increase your overall financial health.

There’s no question about personal debt: you need to ditch it fast, so you own outright growth assets and can redirect all the money spent servicing debts to securing your future wellbeing.

But how can you manage this? The saying is, “don’t be writing cheques your body can’t cash,” and neither should you be writing cheques your bank balance can’t cash.

The second and most powerful prescription for financial health and wellbeing is even simpler:


This should ensure that you live the life you want, how you want to live it, for as long as you live.




The information provided in this page is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information with regard to your objectives, financial situation and needs. You should seek independent advice from your financial adviser before making any decisions.



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