Editor’s Note: Today’s post is authored by Erica Holland. In addition to her full-time role at a private equity firm, Erica runs a personal finance and lifestyle blog, ModMoney, where she simplifies personal finance in a relatable way, and dives into important “real world” topics seldom taught in school.
From Erica: There’s something about the start of a new year that renews our motivation to accomplish goals. Maybe that means finally becoming a morning person. Or hitting the gym more regularly. Perhaps we want to be more present with loved ones or pause social media activity before bed. We set these intentions in an effort to live better, healthier, and happier. But there’s an important part of living well that we often overlook: financial health.
The idea of managing your money can be daunting. But in this digital age, technology platforms are making it increasingly easier to track, save, spend, and invest your money in a savvy way. To get you started, here are the five best apps to help you manage your money this year.
1. Save money with Digit.
Saving money while you’re young is one of the surest ways to build wealth. Let’s break it down. When you put money into a savings account, your dollars earn interest. As time passes, you build interest on your original balance AND on the interest you have accumulated. This is called compound interest and grows your balance exponentially. Let’s say you start a habit of saving $500 per month into an account earning 5% interest. In 20 years, your balance will be over $200,000. In 30 years, it’s over $400,000. Fast forward 50 years, and it’s $1.3 million! Compound interest literally turns time into money.
The problem is that it takes time and effort to put away a portion of your paycheck every month. Enter Digit, a software platform that lets you save without thinking about it. 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’ll be building savings without even noticing.
2. Track your net worth with Personal Capital
Think about all of your financial accounts: checking, savings, brokerage, 401(k), mortgage, student loans, credit cards, etc. While it would make things much simpler, it’s unlikely that all of these accounts are with one bank. So how do you keep track of it all? That’s where Personal Capital comes in.
Personal Capital is a free app that aggregates your accounts onto one dashboard, letting you see your whole net worth in one place. But beyond giving you a full picture of your finances, it also tracks your income and spending, helps you set a budget, monitors your investment accounts, points out hidden fees, and even helps you plan for retirement. If you download only one app this year, make it Personal Capital.
3. Invest money with Wealthfront.
Investing in a diversified portfolio can help you grow your nest egg much faster than letting it sit in a savings account. Plus, your 20s and 30s is the time when you can afford to take on some investment risk. Still, many people don’t have a long-term investing strategy in place. This is where Wealthfront comes in. Wealthfront is an automated online investment platform. In other words, Wealthfront makes long-term investing accessible and affordable, especially for new and young investors.
Wealthfront starts by getting to know your age, income level, and retirement goals. Then, it calculates the best risk-adjusted strategy and invests your money into the proper index funds. Wealthfront monitors your portfolio and periodically rebalances it in the most tax-efficient way. All you have to do is sit back and relax! The bottom line is that investing doesn’t have to be intimidating, complex, or time-consuming. Wealthfront allows you to passively invest in a long-term strategy that will help you reach your goals.
4. Spend money with Ebates.
Fiscal discipline is important. But so is treating yourself to some online shopping every once in a while! Ebates is a shopping portal that allows you to earn cash back for every dollar you spend at over 2,000 retailers. All you have to do is sign up for an Ebates account (and automatically earn $10), click on your retailer, and shop like normal. You’ll often see offers for 4-10% cash back at department stores, boutiques, big box retailers, and even travel booking sites. Ebates sends you a check every three months for the cash you’ve racked up. You will inevitably spend money online this year, so why not earn cash back while you’re at it?
5. Check your credit score with Credit Karma.
Your credit score is an important number to know. It determines whether you’re approved for a credit card, your ability to rent an apartment, the interest rate on your mortgage, insurance premiums, security deposits on utility bills, and it even shows up on employee background checks. Bottom line: you should know it.
Before the age of technology applications, your credit score was kind of a black box. Now, apps like Credit Karma give you access to your credit score and credit reports for free. Credit Karma also makes it easier to actually raise your credit score. It breaks down the five factors that contribute to your score and tells you exactly where you stand on each. Now that your score is free and accessible, there’s no excuse not to monitor it.