Money Clarity

Am I financially healthy? A six-point check

Six numbers cover it: how much of your income goes to EMIs, how many months of expenses you hold in reserve, whether you clear your card in full, whether you know your committed cost, whether your rates are current, and whether your savings happen before you spend. Work them out once and you will know exactly where you stand.

The problem: "am I doing okay" is not a question you can feel your way to

Most people assess their finances by how the month felt. That is a poor instrument - a comfortable month with high debt and no reserve is a worse position than a tight month with neither. Feeling is influenced by the last large purchase, not by structure.

Income tells you very little on its own
A healthy-looking bank balance a week after payday means nothing
The absence of a crisis is not the same as resilience
Six specific numbers replace the guessing entirely

The six numbers, and where the line sits

Each takes a minute. Write down all six before judging any of them.

EMI to income: total monthly EMIs divided by take-home pay. Under 30 percent is comfortable, 30 to 40 is tight, above 40 is fragile
Emergency reserve: liquid savings divided by monthly expenses. Three months is a floor, six is comfortable
Credit card behaviour: do you clear the statement in full every month? Yes or no. Anything else is a no
Committed cost: do you know what leaves your account monthly without any decision from you? Most people are 20 to 30 percent low
Rate currency: is your loan priced at what you could get today, or at what you agreed years ago?
Savings order: does saving happen on payday, or with whatever is left at month end? The second rarely happens

What a weak score actually costs

These are not grades. Each one has a price attached, and the prices are very different in size.

EMI above 40 percent means any income disruption becomes a default risk within weeks
No emergency reserve means every unplanned expense becomes credit card debt at 36 to 42 percent
Carrying a card balance is the single most expensive thing on this list by a wide margin
An out-of-date loan rate on Rs 10 lakh outstanding costs roughly Rs 1,500 a month
Saving from what is left over produces, on average, nothing

What to fix first

Strict order. Fixing these out of sequence wastes effort and sometimes money.

Clear any revolving credit card balance. Nothing else competes with 36 to 42 percent
Build one month of expenses in reserve, then continue toward three
Bring your loan rate to market - the largest recoverable amount for most people with debt
Cut recurring charges you no longer use
Automate saving on payday rather than at month end
Only then optimise cards, rewards and discretionary spending

Common questions

How much of my salary should go to EMIs?

Under 30 percent of take-home pay is comfortable, 30 to 40 percent is tight but manageable, and above 40 percent leaves no room for an income disruption. Lenders will often approve you well past this, so it is a limit worth holding yourself to rather than expecting to be enforced.

How many months of expenses should I keep as an emergency fund?

Three months of essential expenses is the working floor and six is comfortable. If your income is variable or you are the sole earner, aim toward the higher end. Essential expenses, not total spending, is the right base.

What is the single biggest indicator of financial trouble?

Carrying a credit card balance month to month. At roughly 36 to 42 percent annualised it costs more than any other common debt, it usually signals that expenses exceed income, and it compounds faster than most people expect.

If you are strong on the first three and weak on the last three, you are in decent shape and optimising. If it is the other way round, the optimisation can wait - fix the structure first.

Written by Danish Mirza, founder of Unyfy. 14 years in Indian lending and collections at Standard Chartered, Barclays, Ola Money and Uni Cards.
Last reviewed 2026-09-08.