Knowing the answers to your financial status is a primary step to improving your financial health and living in financial freedom. Before continuing to read take out a sheet of paper and answer the following 3 questions. What is you credit score? What is your net worth? and What percentage of income are you saving? In a recent Yahoo! Finance article, Liz Davidson evaluates the aforementioned questions.

What percentage of my income am I saving?

The hardest thing about finance is that you can’t focus on one thing at a time. If you focus only on eliminating debt, you’ll neglect your long-term retirement savings. If you max out your retirement savings while holding on to high-interest debt, you’ll get stuck wasting dollars on high interest payments rather than saving more for your future. Your financial decisions don’t exist in a vacuum, but people who save a high percentage of their income tend to find it easier to make the moving parts work.

How much should you be saving? Many people follow the rule of thumb to save at least 10 percent of their income for retirement and another 10 percent for other goals, such as an emergency fund. High-percentage savers also save on borrowing costs since they are able to pay cash for things, such as automobiles, rather than getting loans. In fact, one of our financial planners calculated that someone could actually save as much as $185,000 over the next 20 years by simply not having a car payment. Imagine how much your net worth would increase if you could do the same.

What is my net worth?

Watching your wealth build can be like watching the grass grow; sometimes the mower comes in and cuts everything down. Use an annual personal net worth statement to track the incremental changes to your financial landscape from a helicopter view. That way you can easily determine if you have too much of your net worth in one investment, too much debt, or not enough saved for emergencies.

Imagine being able to review your net worth statements for the past 10 years showing your debt slowly declining as you pay down your mortgage and your assets increasing as you save more. You would have a better perspective on things so that when real estate values fluctuate or the stock market falls you can know when to relax, and when to be concerned.

What is my credit score?

Your credit score is not the “be all and end all” of finance — it is not an investment and doesn’t generate future income — but it does help reduce costs by lowering the expense of borrowing money. For example, if you have a credit score around 680, you might qualify for a 30-year fixed mortgage around 5% in today’s market, but if you have a credit score over 760, you might qualify for a rate around 4.625%. It may not seem like much, but if you were to borrow $250,000 over 30 years, a few tenths of a percent could cost you over $20,000 in additional interest. When you combine that with the savings you might get from better rates on things like credit cards and auto loans, you start to see why a good credit score is important to your financial success.

Paying lower interest rates on debt is not the only benefit of having good credit. Some employers look at an applicant’s credit history before considering them for hire, and many auto insurance companies give discounts to customers with high credit scores because having good credit is correlated with lower insurance claims. Having excellent credit can save you a significant amount over your lifetime. Learn how you can improve your credit score at myFICO.com.

Money Mayhem Tip: The key to financial health is knowing where your money is going and how your money is working for you. Whether you are 18 or 35 the concept of money is the same but how you use it can be somewhat different.