What variables analyzes BBVA Bconomy to the calculate your health financial?

Learn how BBVA Bconomy can measure your financial health
Saving for unforeseen events or reaching your savings target can help you to live with greater peace of mind. BBVA Bconomy is the new tool that BBVA has developed for its customers to offer them the chance to track their expenditure and income in order to improve their savings capacity. BBVA Bconomy is designed to measure your financial health. You will be able to find where you might be spending more than you should and in which areas you could improve.
Top Banner BBVA Bconomy Top Banner BBVA Bconomy
BBVA Bconomy
The tool that helps you to set and achieve a savings goal.
The four variables to take into account when measuring your results are: your monthly savings capacity, your financial freedom, how much you pay on your mortgage and your ability to repay your credits and loans. These four variables take into account your income, your savings and your expenses according to the information on your BBVA bank situation.

To help you to understand this type of measurement, this article will explain the meaning of every variable and how they are used. Use BBVA Bconomy to measure your financial health!

1. Monthly saving capacity

What you save every month has a big impact on your financial health, regardless of the amount. These small savings are what permits you to gradually build a financial cushion as a safety net to help you in unexpected situations. For this reason, BBVA Bconomy measures your saving capacity as one of the main variables.

A person's monthly saving capacity is calculated by subtracting their monthly expenses from their monthly income. With the aim of setting standards that constitute a situation that is considered adequate for your financial health, a saving of at least 20% of the monthly income per person is considered to be the optimum measurement. This percentage forms part of the rule 50/20/30, made popular by the U.S. senator Elizabeth Warren, in her book "All your Worth", published in 2005.

For example, if a person's monthly income is €1,200 and they pay €900 in expenses, they have a savings capacity of 25%. This situation is considered sufficient to create a financial cushion according to the to reference parameters.

2. Financial freedom

Financial freedom is the second of the variables included in the measurement of your savings score in BBVA Bconomy. Simply explained, financial freedom is a measurement that can permit you to know how many months you can live without income and maintain the same living expenses.

To measure your financial freedom, you must take into account the total balance of the account at the time of measurement and other savings that you may have in investment products, such as funds, deposits, securities accounts, etc.

Having financial freedom can bring a greater peace of mind against unforeseen circumstances. In order to cover your expenses if you stop receiving income, most financial planners, such as Dave Ramsey (in the book “The Financial Peace Planner”) and Suze Orman (in “The Road to Wealth”, among other books) consider that optimal financial freedom would be at least six months.

3. Front-end ratio to cover your housing expenses

The third variable used by BBVA Bconomy is the front-end ratio in housing expenses, either mortgage or rental expenses. For good financial health, a person should not allocate more than 40% of their income to the payment of the mortgage or rent, according to Fannie Mae, which is the popular name for the Federal National Mortgage Association in the United States.

Again, with the example of the €1,200 monthly income, if this person pays rent of €540 a month, this means that they will be allocating 45% of their income to housing. This percentage is considered above the recommended amount.

4. Back-end ratio for paying credits and loans

The last of the parameters used for measuring your financial health consists of the back-end ratio indicating the monthly payments in loans apart from those in the previous variable. These debts can include various obligations such as credits, loans, bills or purchases financed with credit cards and others. For good financial health. it is advisable not to allocate more than 35% of your income on paying debts. Recommended ratio, in the book “Practicing Financial Planning: For Professionals and CFP Aspirants”, written by two lecturers in economy from the University of Michigan.

To finish with the example of the salary of €1,200, if this person is paying back a student loan of €240 a month, his back-end ratio will be 20%. In this case, he would be below the recommended maximum amount.

Center banner Bconomy Center banner Bconomy
Start saving
With BBVA Bconomy, you can compare your expenses and create a financial cushion.

How variables become a result

Once BBVA Bconomy has all these details, the tool converts the results obtained into a number between 0 and on 25, with 25 being the maximum score per variable. When a specific variable of the four fulfills the recommended percentage standards, or even improves it, this variable obtains a score of 25. Once the scores of all the variables are measured, they are added together giving a score from 0 to 100.

BBVA Bconomy: learn to save and control your expeniture

This information can be of great help to those who want to save more. BBVA Bconomy can offer recommendations to help you improve your financial health.

Now you know how BBVA Bconomy measures your financial health. Why not start tracking your savings and learn how to control your expenditure. BBVA Bconomy gives you the necessary tools to help you to achieve your goals and your savings targets.

CTA Bconomy CTA Bconomy
Accounts - You might also be interested in Accounts - You might also be interested in

You might also be interested in

  • They help identify the bank receiving a transfer, thus ensuring the security of the process.
  • We've made available several online features to make your banking easier, no matter where you are.
  • Transfer times vary. We'll explain all the aspects involved in this banking transaction.
Accounts - Tools Accounts - Tools

Account tools