Nothing can give you a more realistic assessment of the overall state of your financial health than "seeing the numbers." But the numbers can tell us only one aspect of the story. Good financial health is based on so many intangibles such as our habits and attitudes towards money management. These can have a profound impact on the state of our financial health. Doing an annual financial health analysis is extremely beneficial because it can help us to:

• discern patterns in our financial behavior.

• better understand our habits as they pertain to money management.

• identify any potential problems or concerns that could undermine our financial well-being.

You can begin your financial health analysis by examining the following core areas:

1. Savings. A successful savings plan is based on consistency. Saving money on a consistent basis is the hardest thing to do. Review your savings history by perusing bank savings account statements for the past 2-4 years. How much of your net income have you saved? Do you save a fixed percentage every month? Does it ever vary? Do you save money whenever you can? How many savings accounts do you have? How long have you had them? Do you save your bonus checks or spend the money? While it is important to look at the percentage of money saved every month, you will also want to examine your liquidity needs. Determining your liquidity needs will depend on a variety of factors such as your age, how many assets you own and the worth of those assets, amount of current debt obligations, whether or not you work on commission or receive a salary, additional sources of income, type of occupation, health constraints and other financial responsibilities such as caring for a dependent partner. The more financial obligations you have, the greater your need for liquidity (e.g., child support payments). Are you putting aside adequate savings given your personal circumstances and financial obligations? If not, why?

2. Debt. Knowing what you owe and how much is just a beginning step. The most insightful data is contained in your payment history. Your payment history can reveal more about your financial habits and innermost attitudes towards money than almost anything else. Do you have a solid history of making payments in full and on time? Or, have you been stuck in a long-term pattern of "basically getting by" with making minimum payments on your credit card bills, ignoring the high interest rate and ever ensuing pile of debt? How often do you miss making payments and why?

3. Investments. Clearly, you will want to know the total value of your investments. However, your mutual fund and brokerage account statements are more than just a record of your investment history, they can tell you a great deal about your personality as an investor. Investing without purpose and not fully understanding how your temperament, attitudes and habits shape investment decisions can be detrimental to your financial progress and well-being. Look at the securities you currently own. What types of investments do you own? Is your portfolio skewed more towards mutual funds rather than individual stocks? Which sectors do you favor? How long have you owned each security in your portfolio? And, why did you buy it? Why did you sell a particular security? Are you a defensive investor? Do all your stocks pay dividends? Is the bulk of your portfolio invested in risky, speculative companies. Do you buy high only to end up selling low? Do you make all your investment decisions on your own? Why do you have an investment portfolio? Because everyone you know has one? What are you investing for? What types of investments are you comfortable with? How knowledgeable are you about your investments? How do you make investment decisions? Do invest haphazardly? Or, do you favor a consistent approach? Do you change your mind frequently about your investments and constantly shift from one investment to another? Do you make investment decisions mostly based on emotion?

4. Ongoing Contributing Factors. Current activities, plans and/or sudden life changes must also be weighed. These can be temporary or of a long-term nature. Every change has some financial consequence, whether positive or negative.

Closing Thoughts

As a practical exercise, doing a financial health analysis is more advantageous than viewing an itemized breakdown of your assets and liabilities. Habit and attitude are the drivers of financial success. A financial health analysis, unlike a balance sheet, can reveal glaring truths about your money habits and behaviors which can have direct impact on your financial health. Through this exercise, we can identify problem areas for improvement to help us achieve our primary objective: better financial health.