New Year's Money Resolutions: From a Financial Advisor

As the calendar flips to 2025, a fresh sense of optimism often follows—especially after a challenging year like 2024. While financial hardships linger for many, with 32% of Americans reporting tougher circumstances compared to last year, there’s also a sense of hope. According to a Financial Resolutions Study, 65% of people believe they’ll be in a better financial position by this time next year.

That optimism can be a powerful motivator. Paired with strategic planning, it’s possible to set the stage for financial success in 2025.

What resolutions should you consider to make this year your most prosperous yet?

Many Americans are still focused on their financial goals. They face challenges such as high inflation, rising housing costs, and higher interest rates. Despite these issues, they continue to work towards their objectives.

If those goals resonate with you, here are nine actionable steps to help you take control of your finances. Even tackling just a few can strengthen your financial footing and help you make progress toward your aspirations.

1. Take Stock of Your Finances

Start by assessing your current financial situation. Allocate 30-60 minutes to review your income, expenses, debts, and interest rates. Knowing where you stand allows you to set realistic priorities and allocate resources effectively.

Key areas to review include:

●      Monthly income and take-home pay

●      Essential expenses (housing, food, insurance)

●      Non-essential spending (entertainment, shopping)

●      Debt balances, interest rates, and minimum payments

Looking at the whole picture can help you make smart choices. This includes cutting costs or paying off debt faster. Doing this can free up money for saving and investing.

2. Update Your Budget for New Goals

Budgets should evolve alongside your circumstances. Rising expenses, such as resuming student loan payments or increasing rent, may impact your finances. Changing your budget to match these changes can help you stay in control. It can also keep you focused on your goals, like saving for retirement or other important things.

3. Safeguard Your Financial Progress with Insurance

Protecting what you’ve built is essential. Review your insurance coverage for health, life, and disability.

Employer-provided options are usually cheaper. They also offer important protection against unexpected problems. This helps you stay focused on your long-term goals.

4. Leverage Tax-Advantaged Health Savings Accounts

If you have a high-deductible health plan, think about using a Health Savings Account (HSA). It can help you save for medical costs. HSAs offer a triple tax benefit: contributions, growth, and withdrawals for qualified expenses are all tax-free. If an HSA isn’t an option, explore a Flexible Spending Account (FSA) through your employer.

5. Build Emergency Savings

Unforeseen expenses like car repairs or medical bills can derail your finances. Start by saving $1,000, then aim for 3-6 months’ worth of essential expenses. Emergency funds provide a safety net, ensuring you can weather surprises without jeopardizing your financial stability.

6. Maximize Your 401(k) Match

If your employer offers a 401(k) match, take full advantage. Matching contributions are essentially free money, so aim to contribute at least enough to receive the maximum match. Regularly review your investment allocations to ensure they align with your goals and risk tolerance.

7. Tackle High-Interest Debt

High-interest credit card debt can drain resources. Focus on paying off balances with the highest rates first to minimize costs. Alternatively, the snowball method—starting with the smallest balance—can provide quick wins and motivation.

8. Expand Your Emergency Fund for Long-Term Stability

Once your initial emergency fund is established, work toward building a robust reserve that covers 3-6 months of expenses. Households with fewer income sources may benefit from a larger cushion.

9. Address Moderate-Interest Debt Over 6%

Beyond credit cards, other debts like auto loans with interest rates above 6% can hinder your financial progress. Prioritize paying off these debts before increasing investments beyond your 401(k) match.

Start the Year Strong

With thoughtful planning and small, consistent actions, you can set yourself up for potential financial success in 2025. If you need guidance, consider consulting a trusted financial advisor to tailor strategies to your unique situation.

Sources:

https://www.fidelity.com/learning-center/personal-finance/best-new-years-resolutions-ideas

Disclosures:

This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.

This material is provided as a courtesy and for educational purposes only.

These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information