5 Financial Resolutions You Should Keep This Year | ModMoney

5 Financial Resolutions You Should Keep This Year

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Happy new year, everyone! I hope you all enjoyed a relaxing holiday with friends and family. Now that it's officially 2017, I have to admit that I have never been good at keeping New Year's resolutions. I tend to focus more on lofty end goals and less on the habits I need to adopt to get there. Inevitably, I lose track, get overwhelmed, and give up within the first month or two. Anyone else in the same boat?

Now don't get me wrong. I'm all for dreaming big. But you also have to be mindful of the journey it will take to get there. This year, I'm resolving to think about my resolutions in a different way. Instead of blindly setting an end goal, I am going to focus on actionable behaviors that will help me get there.

This year, I encourage you to set some financial resolutions with me. But instead of resolving to "save more" or "spend less," I want you to think about specific habits you can adopt to improve your financial fitness. To get you started, I'm sharing five financial resolutions that will set you up for your best year yet.

1. Track your net worth

This is a topic I haven't covered yet on ModMoney. However, tracking your net worth is an important habit to get into. Think about your net worth as a reflection of your personal balance sheet. It is the one metric that represents your entire financial position. Your net worth is the value of everything you own minus everything you owe.

Many of us have several assets in different places. We may have a checking account with Wells Fargo, savings with Ally, brokerage with Vanguard, 401(k) with Fidelity, equity in a house, ownership of a car, etc. All of these are assets that we own.

Additionally, many of us have debt in different places. We may have a credit card with American Express, a mortgage with Chase, a car lease with Volkswagen Credit, and student loans with Sallie Mae. That's a lot to keep track of!

Thankfully, there are free financial software tools that let you track all of your accounts in one place. My favorite, hands down, is Personal Capital. This software consolidates all of your accounts on one user-friendly dashboard. Oh, but there's more! Personal Capital tracks your cash flow and spending, helps you set a budget, advises on your investment accounts, points out hidden fees, and helps you plan for retirement. I can seriously spend hours playing around with all of Personal Capital's functionality. Some of you may be familiar with Mint, which also helps you track your net worth. However, I prefer Personal Capital because of the added budget, investment, and retirement tools.

To kick off your first resolution, sign up for Personal Capital! It is the perfect tool to help you understand your financial situation, track your net worth over time, and plan for your future.

Using Personal Capital to Track Your Spending | ModMoney

2. Contribute to your retirement fund (at least as much as your employer will match)

If you're a young professional, the concept of retirement may seem far away. After all, we all have more immediate financial obligations to worry about. Still, compound interest is a powerful thing. It's important to save early and let your money grow with time.

A 401(k) is the most popular employer-sponsored retirement plan. The best part is that most employers match your contributions dollar for dollar up to a certain amount. Often 3-5% of your salary! Think about this as free money. But there's a catch!

Let's say I make a $100,000 salary, and my employer matches up to 5%. That's an extra $5,000 in my 401(k) each year. However, if I only contribute $3,000, my employer will also only contribute $3,000. In this case, I'm leaving $2,000 on the table.

Here's a resolution that will go a long way toward securing your future. This week, find out how much your employer is willing to match. Then, bump up your retirement contribution at least in line with that amount.

Related posts: 5 Things You Need to Know About Your 401(k) | The Importance of Saving Early

3. Use Digit to help you pay down debt or save

Digit is one of my favorite software products because it lets me save without thinking about it. If you don't already have an account, this is an easy, free, and actionable resolution to check off for 2017.

Digit links to your checking account and moves small amounts of money every few days into a savings account. The Digit algorithm is smart enough to analyze your income and spending habits so that you never have overdraft issues.

Before you know it, you will start to build savings without even noticing! Your unique financial situation will dictate how you should manage this excess cash. Here's a guide to help you prioritize:

  • Do you have student loans, credit card debt, or other high-interest rate debt? If so, prioritize paying this off. Let Digit build up a stockpile of cash for you. Then, transfer it to pay off these accounts.
  • Do you have an emergency savings account that covers 3-6 months of living expenses? If not, Digit is the perfect tool to help you get there. It's important to have a rainy day fund to access in case of emergency.
  • If you don't have debt and already have an emergency fund, congrats to you! You may want to consider investing this excess cash into an investment account like Wealthfront, which I talked about here. This is how I use Digit. Wealthfront already manages your first $10,000 free, but if you sign up through my link, you'll get an additional $5,000 managed free.

To knock out another resolution today, sign up for Digit, and you'll be well on your way to saving more than you thought you could.

4. Check your credit reports and know your score

Your credit score is what lenders use to evaluate your risk as a borrower. There are a few different credit scores out there, but FICO is the most widely used. Your FICO score determines credit card approvals, interest rates on your mortgage or car loan, insurance rates, and even shows up on employee background checks. There are 5 factors that determine your score, which I walked through in this post.

So how do you find your FICO score? Several credit card issuers offer cardholders their score for free. If you don't have access through a credit card, there are other options. Credit Sesame, for example, offers free TransUnion credit score updates on a monthly basis. While this is different from a FICO score, it will at least give you an idea of where you stand from a credit perspective.

Your credit score is calculated off of the data in your credit reports. There are three consumer credit bureaus that collect your credit history data to create these reports: Experian, TransUnion, and Equifax. You are entitled to review your credit report for free once a year with each of the three bureaus. I encourage you to do this and ensure against any errors!

This year, resolve to check each of your three credit reports by requesting them from www.AnnualCreditReport.com.

Related posts: The Ultimate Guide to Understanding Your FICO Score | Does Canceling a Credit Card Hurt Your FICO Score? | Should You Really Open That Retail Store Credit Card?

5. Maximize every dollar you spend

Fiscal discipline is important. But so is treating yourself every once in a while with a mini shopping spree! I do most of my shopping online for two reasons. First, I don't like crowded malls. Second, I can ensure I'm getting the best deal and earn money back. There are a few tools I use to maximize my online shopping:

Ebates | ModMoney

Ebates

Ebates is an online shopping portal that allows you to earn cash back at over 2,000 retailers when you shop online. All you have to do is navigate to the Ebates website, choose your retailer, and shop like normal. Ebates sends you a check every three months for the cash you've racked up. It is so easy! Sign up for Ebates with this link to receive a $10 welcome bonus.

Wikibuy | ModMoney

Wikibuy

Wikibuy is a browser extension that activates when you shop on Amazon. While you browse, the program searches for the same product at the lowest price available across other sellers. Also, Wikibuy partners with Ebates and lets you know when your purchase may be eligible for cash back. Plus, you'll automatically earn $5 when you sign up!

Honey | ModMoney

Honey

Honey is another browser extension that automatically searches for and applies coupon codes. Before I discovered Honey, I searched for coupon codes on Google and manually tested each one. This took a lot of time! Now, Honey activates when I open my shopping cart and tests available codes in a matter of seconds. It's super easy to install, so sign up here!

Pro tip: Be careful when combining a shopping portal with a coupon code. Some portals will only let you use coupon codes that they advertise on their own sites.

We will all inevitably spend money online this year, so why not earn cash back while we're at it? This year, resolve to click through a shopping portal and test coupon codes every time you shop online.

Related posts: 5 Apps That Will Save You Time & Money This Holiday Season | Earn Points & Save Money When You Shop Online

The Bottom Line

There's something about the start of a new year that renews our motivation to accomplish goals and improve ourselves. But more often than not, this refreshed sense of accountability fizzles out prematurely. This year, I'm resolving to take specific actions and adopt certain behaviors that will hold me accountable throughout the year. I hope you'll join me in setting some actionable financial resolutions!

What is your top resolution for 2017?

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