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5 Financial Resolutions You Shouldn't Put Off This Year

By Deborah Ziff

This may be the year you resolve to eat better, improve your work-life balance, and finally start running again. But is it also the time to think about getting your financial house in order?

Maybe so, says Jim Wang, founder of the personal finance website Wallet Hacks*. "Around the new year, or any time you're trying to pick up a new habit, you're really excited about it," he explains. And that enthusiasm can help motivate you to take care of important money tasks that can help set the tone for the rest of the year.

Here are five financial resolutions you shouldn't put off this year.

Check out your credit report

Don't know your credit score? You're not alone. According to a small 2015 study* conducted by Lending Tree, nearly 60% of Americans are in the same boat. Those three numbers can impact whether lenders extend you credit and at what interest rate, so it's important to know what yours are, says Julie Ford, a fee-only financial planner and founder of Ford Financial Solutions in New York.

A simple way to find out your score — and get a picture of your debt and spot any inaccuracies — is to request a copy of your credit report. You can get one free from each of the three credit reporting bureaus — TransUnion, Experian, and Equifax — once every 12 months at annualcreditreport.com. Be sure to check all three reports, as there may be variations between them. You can request the reports at once, or stagger them throughout the year to get an up-to-date snapshot of your debt.

Ford recommends reviewing your credit score once a year at a minimum, or more frequently if you're trying to build up your credit or are about to apply for a loan. Apps like Credit Sesame* provide you with a free monthly credit overview and will alert you if your score changes.

Related: All About Consumer Credit Reports

Get out of debt

The average household is paying more than $6,600 in interest on debt each year, according to NerdWallet's 2015 American Household Credit Card Debt Study*. That equates to roughly 9% of the average household income.

If you're re-examining your budget this month, you may also want to consider how you're paying off your debt. Prioritizing debt with higher interest rates often makes mathematical sense, but knocking out smaller loans first can offer a psychological boost and help motivate you to tackle even more debt.

Tools like Unbury.me*, a free loan calculator, can be useful in comparing which repayment method works best for you. But no matter what method you choose, even the act of revisiting your debt repayment strategy can be beneficial, Wang says. "It will gives you sense of more control over finances," he says.

Related: How to Live Life While Paying Off Your Debt

Come up with a budget you can stick to

Is your wallet feeling the post-holiday hangover? The new year is an ideal time to reassess your budget and create one you can more easily follow. One strategy? Project expenses to the next month and match those numbers. "Assigning every dollar a job is a really powerful idea," Wang explains.

Another option, he adds, is to follow the 50/20/30 rule: 50% of your earnings is for essentials, such as housing, food, utilities, and transportation; 20% is for savings, including retirement accounts, emergency funds, or debt repayments; and 30% is for nonessentials, including entertainment, travel, and shopping.

Spend money on what's important to you

With the rise of one-click purchasing, it's never been easier to spend money, which is why Ford recommends making a habit of looking at credit card and bank statements on a monthly basis. This helps you track spending and ensure you're allocating resources toward things that are important to you.

In fact, Wang says it's okay to give yourself permission to buy items that can improve your life and help you save money in the long run. For instance, a $100 single-cup coffee maker is more expensive than a drip coffee maker, but if you actually use it, it will save you from spending big on daily trips to your local coffee house.

Related: What's Your Spending Personality?

Get serious about your savings

If you had to come up with $400 for an emergency expense, would you have enough in savings to cover it? Nearly half of Americans said no, according to a 2014 report* issued by the Federal Reserve Board's Division of Consumer and Community Affairs.

Automating your savings is one way to build up a financial cushion, and mobile apps can help. Digit*, for instance, analyzes your income and spending habits to figure out what you won't miss, then transfers that amount into a savings account. Acorns*, meanwhile, rounds your purchases up to the nearest dollar and drops the spare change into an investment account.

Setting short- and long-term goals can also guide your savings. One way to start is to establish a time horizon for each goal, figure out a dollar amount each will cost, and set your priorities and savings plan accordingly. For example, Wang funnels money for goals with short time horizons — like saving for a new car — into his savings account. But money for longer-term goals, like retirement or saving for his kids' education, goes into stock funds.

Having big-picture goals can also help clarify your priorities, Ford says. "Then it becomes easier, when you have those long-term goals in mind, to see the difference between needs and wants today," she says.

Related: Am I Saving Enough for Retirement?

Whether you decide to review your credit report, reassess your savings plan, or create a budget you'll follow, taking the time now to get your financial house in order can help you start the year off on the right foot.

*Remember to always check the terms and privacy policy before visiting websites or downloading apps. Citi is not responsible for products and services offered by other companies.

Deborah Ziff is a freelance journalist based in the Chicago area who writes about a range of topics, including higher education, personal finance, and business.

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