I came across this website that could calculate how healthy my financial standing is by asking ten questions.

But I feel those ten questions are too generic to make sense to everyone. E.g.

  • All questions are subjective, you can be actually financially secure but due to your higher expectation, you feel less secure; while you can actually be financially struggling but not realising it and you feel more secure than you should.

Has anyone come across any algorithm that can calculate financial healthiness objectively?

  • 4
    That calculation will always be subjective, because each individual has a different set of values and expenditures. Obviously you can be simplistic and assume a lot of stuff, but the true financial healthiness will always be subjective. – ssn Nov 27 '18 at 10:50

No, because "financial health" is a vague concept that cannot be rigorously defined.

Consider a simpler question. If someone asked, "I am investing X dollars per year in my retirement plan, which is invested in such-and-such a way. How much money will be in this fund when I retire?", we could presumably make some realistic predictions about investment performance, do some calculations, and give him an answer. But if he asked, "Will I have enough money when I retire?", how could anyone possibly answer that? Enough money for what? What sort of lifestyle does he expect to lead? Will he have other income? Will he collect government benefits? And so on endlessly.

There is no "official" definition of "financial health". It's a vague, general concept. Presumably if someone is deeply in debt and sinking further into debt every day, we would say he is in poor financial health. If someone has a fortune in the bank that is growing steadily, we would say he is in good financial health. But if someone said that your financial health is 32.7, well, however they're getting that number, it's with some formula that they just made up. And someone else giving a number would have his own formula. Even if the government or some international standards organization declared that some formula was the official, sanctioned formula, it would still be totally arbitrary and highly debatable.

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