Have you made any resolutions this year? Are they still going strong? Whether or not they are, there are a couple things you can do to feel refreshed in the new year. It’s a natural time for a little reset!
Maybe last year didn’t quite pan out as you’d hoped in terms of your personal finances. Perhaps you overspent or didn’t contribute enough to your retirement savings. Sometimes, just getting back to basics can help jumpstart movement in the right direction. In that spirit, we’re reminding you of 5 simple ways to improve your financial standing in the new year. If you follow even one of them, your financial health will improve.
Let’s get started!
1. Get Organized
The first step to financial power is organization. Start by tracking your spending to get a clear picture of where your money goes each month. You might be surprised to see how much you’re spending on both essential and discretionary expenses.
Once you understand your spending habits, create a budget to stay on top of your expenses. A good rule of thumb is to allocate 50% of your income to essential spending, 30% to discretionary spending, and 20% to savings. Use tools like spreadsheets, budgeting apps, or your bank’s mobile app to help you monitor and refine your budget.
Reassess your expenses for potential savings. Look for ways to cut back, such as dining out less frequently or canceling unused subscriptions. Additionally, consider making your 2025 IRA contribution early to maximize potential long-term growth.
2. Build An Emergency Fund
With an understanding of your monthly expenses, start building up those emergency savings to protect your financial plan from unexpected disruptions, such as job changes or medical emergencies. Ideally, this is a fund with enough resources to cover three to six months’ worth of living expenses.
Set a target amount and decide how much you can put away each month to reach your goal. Automating deposits into a dedicated savings account can make this process easier. To take advantage of higher interest rates, consider a money market savings account.
3. Develop a Debt-Reduction Strategy
Carrying high-interest debt can hinder your financial progress. Start by focusing on accounts with the highest interest rates, such as credit cards, and aim to pay more than the minimum balance each month.
Consolidating debt into a single loan with a lower interest rate is another effective strategy. Simplifying your debt can make it easier to manage and reduce stress. If you’re expecting extra income, like a raise or bonus, consider using it to pay down balances faster.
4. Enhance Your Investment Contributions
Investing is a key component of long-term financial health. Increasing your contributions and taking a more sophisticated approach can improve your results. Start with your employer-sponsored retirement plan and ensure you’re taking full advantage of their matching programs.
For more diversified growth, consider allocating additional funds to traditional or Roth IRAs, keeping in mind their respective tax benefits and income limits. If you have an HSA, treat it as a dual-purpose account—a safety net for medical expenses and a tax-advantaged investment vehicle. Many HSAs now offer investment options, allowing your contributions to grow beyond a standard savings account.
Meet with one of our advisors to ensure your asset allocation reflects your current financial goals and time horizon.
5. Save for Something Special
What are you looking forward to in 2025? Setting aside money for a short-term goal, such as a vacation or a new car, can keep you motivated and reinforce positive financial habits. First, set a target amount and then a timeline. Decide how much to set aside from each paycheck. Consider automating these contributions into a separate savings account. And be sure to revisit your budget to ensure this goal aligns with your overall financial priorities.
Kick Off 2025 With Good Habits
Making a plan for your money doesn’t have to be overwhelming, and even these simple financial prep goals set you ahead of the millions of Americans flying by the seat of their pants when it comes to finances. If you can do even one, of these things that you haven’t done before, your financial wellness will grow. By staying organized, planning for the unexpected, and committing to your priorities, let 2025 be your year.
Small, consistent steps can lead to significant progress. Secured Retirement is here to help you make even bigger leaps in financial wellness too. Use your resources and start making smarter financial moves today! Give us a call: 952-460-3260.
