4 Financial Numbers Everyone Needs to Know

It can be hard to know where you stand when it comes to your personal finances. After all, there are tons of different things you have to manage, from your bank accounts to your brokerage accounts to your credit cards and more.

The good news is, you can get a good idea of how you're doing with our money -- and where you need to improve -- if you know just four key financial numbers. Here's what they are.

1. Your credit score

Your credit score helps determine if you can get a loan, what rates you'll be offered, and which credit cards are available to you. If you want to rent an apartment or sign up for utilities or get a cellphone, you'll have a credit check. And almost a third of employers do credit checks on at least some of their workers.

Since your credit score is used for so many things, you need to know what your score is. You can check it online for free from Discover even if you aren't a cardmember. You can check your full credit report for free weekly (with the information used to determine your score) at AnnualCreditReport.com.

If your score is below 700 or so, you won't be offered the most competitive rates. You can improve your score by paying off debt to keep your credit use below 30% of the total credit available to you, making on-time payments, and making sure you have a good mix of different kinds of loans.

2. Your net worth

Your net worth is equal to your assets minus your liabilities. To calculate it, add up the value of everything you own and subtract all your debts. For example:

• If you own a house worth $400,000, a car worth $30,000, have $20,000 in a brokerage account, $10,000 in a checking account, and $30,000 in personal property, you would have $490,000 in assets.
• If you owe $320,000 on your mortgage, $10,000 on your car, and $2,000 on your credit cards, you'd have $332,000 in liabilities.
• Subtract your liabilities from your assets to find that your net worth is $158,000.

Knowing your net worth is important because it measures how much you own or how much wealth you have. It should start lower and increase over time as you pay down debts and acquire more valuable assets.

3. Your retirement savings goal

It's important to know how much you need to save for retirement so you can ensure you have financial security as a senior. Social Security typically only replaces about 40% of your pre-retirement income. Experts recommend replacing around 80% of income at a minimum in retirement. So, you need savings -- and you're more likely to have the funds you need if you set a goal early and work toward it.

You can set a quick retirement savings goal by estimating that you need 10 times your final salary. Figure out how much your final salary will be by taking your current salary and adding 2% per year to it for each year until your expected retirement age. That's likely to be around how much you earn, so multiply that number by 10 and set that as a savings goal.

Once you have your big goal, you can use calculators at Investor.gov to estimate how much to save and invest each month. The earlier you start saving for retirement, the more time your savings will have to grow with the power of compound interest.

4. Your debt-to-income ratio

Finally, it's important to know your debt-to-income ratio. That refers to how much you owe relative to your earnings. Figure out the total amount of your minimum monthly payments on credit cards, your mortgage, your car loans, and any other debt you owe, and then compare that to what you earn. Say, for example:

• You bring home $5,000 a month
• You have a $2,200 mortgage, a $55 monthly credit card bill, and a $300 car payment so your total debt is $2,555 a month
• Your debt-to-income ratio is $2,555/$5,000 or about 51%

Ideally, you'll keep this ratio below 35% so you have plenty of money left over to save and spend.

Knowing these four numbers can help you to identify where you're doing well and where you can improve. If you have a high debt-to-income ratio or a low credit score, for example, you may want to focus on paying down debt. If your net worth is negative, repaying loans and acquiring more assets will help.

So, calculate each of these four numbers today, set goals to improve them if you need to, and then track them over time to monitor your progress.