We often wait for New Year's Eve to make big promises to ourselves, whether it's losing weight or finding a new job. But life is dynamic, and you don't need a specific calendar date to improve your situation. You have the power to hit pause today, reflect on your journey, and reset your finances so they support the life you truly want to live.
Get ahead by looking back
The first step in any successful financial reset is reflection. We recommend looking back at the decisions you've made over the last year or two. To get a clear picture, ask yourself a few honest questions.
Consider what changed for you financially in the past year and if your decisions played out the way you intended. Ask yourself what you would do differently knowing what you know now. It's also vital to assess if your relationship with money has shifted. Are your current choices aligned with your priorities and values, and are they helping you achieve the life you want? Finally, ask yourself what you learned. You might find your current strategy works well, or you might uncover hidden areas that need attention.
Start filling in the gaps
Once you've reflected, it's time to identify what you don't know. You might be missing key information about what money really means to you. Perhaps you need a better understanding of how credit scores work and how to improve yours. You might also want to explore how to align spending with your values or if money can truly buy happiness.
Education is a powerful tool here. A great place to start is Facet Learn, which is a free library covering everything from the basics to minimizing taxes and choosing the right credit card. Your planner is also a fantastic guide to help you navigate these topics.
Know where you stand
You can't build a roadmap without knowing your starting point. A true financial reset requires a solid understanding of your current picture, which involves four factors: your credit report, spending, financial wellness, and credit score.
These factors are critical because rethinking your financial life depends on data just as much as feelings. While financial decisions are often emotional, using data allows you to make logical decisions that still honor your priorities.
Start with your credit report. This document shows every loan and credit card in your name and your payment history. By law, you can receive one free credit report from each of the three main bureaus (Experian, Equifax, and TransUnion) each year. If you apply for credit and are denied, you can also request a free report then.
Here is a pro tip. Since you get one free report from each bureau annually, we suggest requesting a report from a different bureau every four months. This gives you a more current, rolling view of your credit situation throughout the year.
When you get the reports, look closely for errors. According to a study by the Federal Trade Commission, mistakes happen about 20% of the time, and erroneous information can significantly affect your score. If you find errors, follow the instructions on the report to correct them.
Next, look at your spending. If you don't currently track it, try writing down your expenses for a month to see where your money goes. Don't forget to note occasional expenses like travel or large purchases.
Revisit your roadmap
Financial planning is a dynamic process, not a static document that never changes. This is why a reset is so important. You need to reevaluate your planning process or work with a professional to get started.
Ask yourself if your roadmap needs adjustments. Have you learned anything helpful or gained clarity on topics you didn't understand before? Think about what you'd like to change. You might have experienced a major life event, or things might feel steady. You may want to beef up your emergency fund, save for a new car or house, or put more away for retirement. Maybe you want to start a side hustle for extra income.
Whatever your priorities are, set yourself up for success by starting small. Research shows we are more likely to achieve outcomes if we take incremental steps rather than making massive changes that don't stick. Think of it like running a marathon. You start by jogging around the block and slowly building stamina. Small financial changes can result in huge accomplishments.
The Facet difference
At Facet, we believe your financial journey is unique to you. That's why we don't sell products or work on commission. Our flat-fee membership model includes access to CFP® professionals who focus on your life and goals. We help you navigate these financial resets with confidence, helping to ensure your money serves your values, not the other way around.
