What do you think is the most important number to know about your finances? Let’s start by ranking these 18 items from Most Important to Least:
Trick question! Every one of these items are essential, in the same way that both your heart rate and your temperature are key to understanding physical health. They show you different things and your health, like your finances, is a dynamic and interconnected ecosystem.
But how can you tell if you are generally financially fit? Is there an equivalent to the 10,000-step challenge that Fitbit popularised (they did not invent it — for more on the background here you can read this)? Currently, there’s not, and Unifimoney thinks there should be.
At Unifimoney, we believe there should be a number that shows just how hard your money is working for you. We spend so much time and energy earning money, investing decades of education and even more in the workforce; we move homes, cities and even countries for better roles and career progression; we work long and often exhausting hours. But we spend so little time actually managing that money.
The harder your money is working for you, the less work you have to do and more flexibility and choice in the life you lead. More importantly, the more passive income you earn, the more financially resilient you will be able to achieve. True financial resiliency means you can both thrive and survive through life's inevitable turmoil. For most people, achieving financial resilience if they do it at all is completely accidental; we believe it should be purposeful and effortless.
We believe the best number to assess your financial fitness is monthly passive income derived from deposit interest, dividends, and cashback from your spend. These 3 numbers collectively tell you a great deal about not only the state of your finances in any one particular time, but also how well you are managing them as a whole. We believe it’s an essential metric (and one many banks keep hidden), so it’s the first thing you see when you open your Unifimoney app.
Seems pretty simple really — tracking your income from your own money seems sensible and straightforward. What makes this so unique and important?
While it’s true this is not new data — you can screen through pages of statements from your broker, bank, credit card companies etc. — you’ll quickly find it’s not readily available and hard work to locate. It’s almost as if the legacy financial services companies don’t want you to know how hard your money is working for you. Because it's free*! That's the important thing, right? It might be to them, but it shouldn't be to you.
Big Brand Banks offer terrible value — current accounts that pay little or nothing and savings accounts that offer little more. Recent research found that 2 out of the top 10 banks had savings rates that were identical to their checking accounts. They use consumer deposits — for which they pay almost nothing — to make a huge profit; they lend your hard-earned money out at up to 25%. You don’t see any of that profit; it goes to their shareholders and into their pockets. At an incumbent bank, it pays to be a shareholder and not a customer.
Credit Card companies also like to hide the real value they provide — points and miles were invented to do precisely this. They control both the exchange rate and the price of the goods you can purchase with their fake proprietary currency; they offer great deals in name but not in reality.
But there’s also another reason this number is so hard to find in our financial mental map. It’s almost impossible for a legacy bank with 30-year-old technology platforms to compile the data. The technological lift and cost outweighs almost any other consideration.
Clearly this one number is not enough — it does not account for debt and spend for example. Also, if you are struggling financially, this number is of little use; it would be like counting steps to try to recover from a cold.
But a simple, straightforward metric is an easy way to create engagement and awareness about personal finance and helps nudge better choices over time. That impact can be truly significant to long-term financial growth and success.
You can’t manage what you don’t measure; the Unifimoney dashboard is designed to make certain you better understand your financial fitness. Knowing how hard your money is working for you is a pretty important place to start.
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The above does NOT constitute an offer, solicitation of an offer, nor advice to buy or sell specific securities. The opinions listed above are not the opinions of Unifimoney Inc. or Unifimoney RIA, Inc. but represent the opinions of independent contributors. These contributors may or may not hold positions in the stocks discussed. Investors should always independently research any stocks listed and form their own opinions, while recognizing that any investments made may lose value, are not bank guaranteed and are not FDIC insured.