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Sometimes just having cash in hand makes you think that it’s enough and your financial health is strong. However, looking at the larger picture is also important. This includes looking at both your savings and your debt.

Here are three quick checks for you to know if you are financially healthy or not.

Contingency money

This is the cash you may require without prior warning. While some of your expenses can be planned—like your utility bills, school fees and grocery—others such as sudden repairs for car or home electronics and emergency medical expenditure may be expenses that you haven’t planned or accounted for.

These expenses are different from the contingencies for which you may have bought theft, travel or medical insurance policies.

Though completely unexpected, sometimes these expenses can add up to a large amount and if you don’t have funds available, you will be in a difficult position. For an expense that cannot be deferred, such as a medical emergency, you may have to borrow money from others and that is a clear sign of financial distress.

Personal loans

These come at a high interest cost, anywhere between 12% and 18% per annum. This means, for a loan of Rs1 lakh, your interest outgo in 1 year will be at least Rs12,000.

Why do you need personal loans? It could be for large expenses that you hadn’t planned for, such as structural repairs at home. Or, you may be spending more than you are able to earn in a month. Or you may need it because you don’t have adequate insurance.

While taking a personal loan will give you instant access to funds, it also increases your cash outgo, thanks to the interest payment. It also gives you a false sense of safety that you have funds, whereas you are just borrowing to spend. Instead, focus on saving and economising to ensure that you have enough for contingent expenses and at the same time buy adequate level of insurance.

Retirement savings

Even after shopping sprees, restaurant meals and movies, you may be able to save. But are you saving enough for the years when you won’t be earning? It is important to start thinking about retirement.

If you are spending everything you earn, you are unlikely to have enough for when you retire. For some, there is a pension to fall back on and for some others a provident fund too. But it’s important to understand that the value of your money is always decreasing due to inflation in the economy.

Therefore, you have to consider the possibility that your investments in pension or provident fund may fall short of your needs in the future. Moreover, with life expectancy increasing, your expenses can go on for longer than you planned.

You finances are not sorted without a retirement plan.