Financial health is one of those terms that gets thrown around a lot, but no one really knows what it is. Some people define it by assets, but I look at it a different way.

Financial health is the ability to adapt to an ever-changing world without going broke. Things like the ability to finance a funeral for a loved one — or having enough money to repair the damage from a fallen tree.

When someone is financially vulnerable, they are not able to do those things. A surprise bill such as a car repair or doctor’s visit can spell disaster for someone in this position. They might not have access to low-interest loans because paying the bills has been hit and miss. Given all these pressures, saving for retirement falls by the wayside.

Disasters and death aren’t the only disruptions in life. Life transitions, even when planned, have knocked the best of us off balance. Did you have a child in the last few years? If you did, have you started a college savings plan for that new child? Have you changed your beneficiaries? Have you adjusted your will? Did you create trusts?

Signs of financial health also include a reliable source of income, few changes in expenses, and a monthly surplus that keeps growing. In addition to doing the math, the difficult arts of self-control and personal stability are necessary ingredients in taking your financial health to another level.

That brings up the idea of your personal relationship with money. It’s surprising to many people how early in life they started developing a mindset around money. It’s an emotional connection, almost as familiar as family. Just as it’s natural for water to flow downhill, so, too, is it natural that people tend to land within certain financial archetypes.

To improve your financial health, there are a few things to do.

First, a household without a spending plan will find it very difficult to survive unexpected expenses. Second, people need to figure out their net worth. Finally, an emergency fund must be established once you know how much you can afford to put in it.

Financial health isn’t just for households.

Businesses measure their financial health and so do charities — but charities get much more scrutiny. People want to know if their charity staff takes three-hour wine lunches instead of performing the mission of the charity — or if the budget is built on one-off sources of income that won’t be around next year. That’s why Charity Navigator has produced a helpful tool.

Long-term financial health means constantly reassessing and adjusting your financial portfolio. That does not mean calling a stockbroker and moving your shares around. It means that every decade (at a minimum) and every life event should start with a full financial checkup.

Judy Heft is the CEO/founder of Judith Heft & Associates, a financial and lifestyle concierge celebrating 25 years in business helping people stay financially organized. She is a certified money coach and the author of “How to Be Smart, Successful and Organized with Your Money.” For more information, visit www.judithheft.com.

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