14 most important numbers that secretly control your life

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While you may still have your Social Security number, childhood phone number, and savings account number memorized, the days of memorizing long strings of numbers are mostly over.

However, that doesn’t mean the numbers aren’t as important today as they’ve ever been. Whether you know it or not, many numbers can determine your financial future and your quality of life.

Staying on top of these crucial data points can help you avoid financial stress and build a strong financial future.

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1. Your net worth

Your net worth is the difference between the assets you own and the debts you owe. Any money in your checking and savings accounts, long-term investments, and cash are considered assets.

Your personal assets, including land or property you own, also contribute to your total asset amount.

In contrast, debts (i.e. liabilities) include any consumer credit card debt, student loan repayments, and remaining principal on your mortgage. Your goal is to have a positive net worth, meaning more assets than liabilities.

A financial advisor can help you calculate your net worth, or you can calculate it yourself by hand. Either way, you’ll want to check your net worth often and adjust your spending and savings accordingly if that’s not the case.

2. Your credit score

Trying to get a loan to buy a house or a car? Your lender will use your credit score (among other numbers) to decide if you are a reputable candidate for a loan.

If the lender thinks you are likely to repay your debt, your credit score will affect how good or bad your interest rate is.

You can check your credit score once every 12 months at no cost and with no impact on your credit score. Even if you don’t plan to take out a loan anytime soon, you should still check your score once a year to catch and flag any errors before they become a problem.

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3. Your ChexSystems score

Unlike a credit report, a ChexSystems report evaluates your banking history and gives you a score that tells banks if you’re a good candidate for a new account.

Fortunately, you don’t have to worry about checking your ChexSystems score as much as your credit score. The number is more useful to banks than it is to you as a consumer.

Still, you have the right to check your score once every 12 months. The higher your score, the more trustworthy a bank will find you.

4. Your savings rate

Your savings rate is a percentage that measures the amount of money you save compared to the amount you spend.

Experts generally recommend saving at least 15% of your income specifically for retirement, as well as saving an extra amount to keep in an emergency fund. A good savings rate is around 20%.

If you fall below this percentage, you might want to seriously consider increasing your savings while reducing your non-essential purchases.

5. Your initial debt-to-income ratio

An initial debt-to-income ratio (DTI) — also called a housing ratio — shows what percentage of your gross income is spent on housing. Your front-end DTI impacts your mortgage eligibility.

For example, if a potential mortgage takes up too much of your gross monthly income, a lender won’t give you a loan. Not even if you have a perfect credit rating or a stable long-term job.

6. Your final debt-to-income ratio

The back-end DTI is another crucial calculation a lender performs when applying for a mortgage.

Instead of measuring just one type of debt, it looks at the total debt you owe (including housing debt) against your total income.

As with your front-end DTI, your primary DTI plays a crucial role in determining whether or not you can qualify for a mortgage.

7. Your mortgage rate

We’ve talked about some numbers that determine your mortgage rate, including your credit score and DTI ratios. But it’s just as important to know your mortgage rate once you finally get a loan.

As of October 24, 2022, mortgage lending was at an average high of over 7%. Knowing your mortgage rate can help you decide if you should buy a home now, wait for rates to drop, or if you can afford to buy now and refinance at a lower rate later.

8. Your 401(k) Match

A 401(k) is an investment savings account that many Americans use to save for retirement. 401(k)s are usually self-funded, but some employers offer a 401(k) match.

If you are not capitalizing on your employer’s retirement match, you should do so immediately. Otherwise, you’re practically wasting money that could make a huge difference in your quality of life after retirement.

9. Your postal code

Where you live can have a bigger impact on your wallet than any other number on this list. This is because your state determines your health insurance benefits and state income tax rates.

Although inflation is high across the country, it is certainly worse in some areas than others, varying not only from state to state, but from city to city.

For example, if you bought petrol in the suburbs and had to fill your tank once you reached the city center just 80 km away, you already understand how much of a difference your postcode can make.

10. Your age

Your age can help determine how much you pay out of pocket for things like insurance. With auto insurance, in particular, young drivers generally have higher insurance rates than middle-aged drivers. Insurance rates are starting to increase for people age 75 and older.

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11. Your retirement age

Speaking of age, the longer you wait to retire or claim benefits — which you can pause until age 70 — the higher your monthly Social Security payments will be once you start claiming them.

12. Your tax bracket

Tax rates and brackets may change from year to year. Also, the bracket you’re in will likely change over your lifetime based on your retirement savings contributions, raises, promotions, and other earnings.

Taxes are complicated, so it’s wise to meet with a financial adviser to understand what tax bracket you’re in and how much you can expect to pay each year.

13. Your Social Security tax rate

This tax year, your Social Security tax rate is 6.2% (a rate matched by your employer). This flat tax rate often changes from year to year, although it usually changes gradually.

You’ll want to pay attention to Social Security tax changes as they happen — they won’t impact your take-home pay too much, but it’s worth keeping in mind.

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14. The current inflation rate

As we said earlier, inflation rates can differ from city to city and state to state. However, you can always look at the national average inflation rate to understand how much prices have changed between this year and last.

Checking the inflation rate can help you adjust your budget for inflation, discretionary spending, and savings to account for real-world changes that dramatically impact your bottom line and quality of life.

At the end of the line

Knowledge is power, and getting to know the numbers that control your life can allow you to steer your own money vessel and reduce your financial stress.

Use them as helpful benchmarks to make sure you’re making progress towards your financial goals, but remember that in the end, numbers are just numbers. You are the one who can use data to build the life you want.

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This article 14 Most Important Numbers That Secretly Control Your Life originally appeared on FinanceBuzz.


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