As 2024 draws to a close, people are starting to shift their focus towards financial planning for the upcoming year 2025.
According to a report by the Associated Press, Courtney Alev, a consumer advocacy expert at Credit Karma, a provider of free credit scores, emphasizes the importance of financial planning whether you are looking to move out from your parents’ house or pay off student loan debts.
“Entering a new year doesn’t erase all the financial challenges we faced in the previous year,” Alev said. “But it can certainly help you manage your finances with a fresh perspective.”
If you are considering making financial resolutions for the new year, experts suggest that you first evaluate your financial status in 2024 and then set specific goals that align with your lifestyle.
Ashley Lapato, a personal finance educator at budgeting app YNAB, recommends asking yourself key questions like, “What does my financial situation look like when I turn 30? How about when I’m 40?”
Liz Young Thomas, the investment strategy chief at SoFi, adds that forgiving yourself for past mistakes is crucial to approach the new year with motivation.
Matt Watson, the CEO of financial tracking app Origin, highlights the importance of determining the “why” behind each financial decision when developing a financial plan for 2025. Setting clear goals, whether it’s saving for a house, paying off credit card debt, or planning a vacation, can help you stay motivated.
“Linking your financial goals with broader life objectives can provide you with more motivation and make it easier to stay on course,” Watson said.
After three years of inflation, wage growth might still not keep up with monthly expenses, leaving many wondering where their money goes. Greg McBride, the chief financial analyst at Bankrate, advises creating a monthly budget for 2025 and tracking expenses throughout the year. Adjustments may be necessary as certain expenses increase while others may need to be cut back.
“Interest rates are unlikely to drop significantly, so it is important to focus on paying off debts, especially high-cost credit card debts, quickly,” McBride recommends making a plan that includes researching 0% balance transfer offers.
“Your control over credit card rates is greater than you think,” says Matt Schulz, the chief credit analyst at internet loan comparison platform LendingTree, suggesting that maximizing this power is a key step to take in 2025. Utilizing 0% balance transfer credit cards can be a powerful tool against high credit card APRs. Low-interest personal loans are also an option.
When devising financial plans, Alev from Credit Karma stresses the importance of setting goals that align with your lifestyle.
“It’s really a marathon, not a sprint,” Alev said.
Setting realistic goals can make it easier to stay committed. Even if your plan is feasible, there may be deviations at times, such as unexpected medical expenses or special life events. In such situations, do not get discouraged and strive to get back on track.
“You can’t manage what you can’t see, so establish a new year plan to check your credit score monthly in 2025,” Rikard Bandebo, the chief economist at credit scoring company VantageScore, suggests ensuring that your credit account repayments exceed the minimum amount, which is one of the best ways to boost your credit score.
McBride suggests setting up automatic increases in deposits, such as increasing 401(k) contributions, setting up direct deposit to a dedicated savings account, and arranging monthly transfers to IRA and/or 529 college savings accounts, as it all adds up.
Financial goals not only involve better money management but also encompass protecting funds from fraud. Johan Gerber, the executive vice president at Mastercard, emphasizes that the golden rule to prevent fraud is to “slow down.”
“If you’re unsure if something is a scam or not, slow down and talk to others,” Gerber advised.
Scammers prey on people’s sense of urgency to fall for their schemes, so taking time to make any financial decision can prevent monetary losses.
Financial goals are not always about dollar amounts; they are also closely related to mental health. To take care of our money, we also need to take care of ourselves.