5 Financially Smart Ways to Start 2025
As the holidays are coming to an end and we head into the new year, one thing you should be asking yourself is how can I be prepared financially to take on 2025? By allowing yourself a moment to reflect and plan, you ultimately set priorities, take decisive action, and gain momentum which will help create a strong financial future. You can do all of this with a simple checklist. Financial planning is like a puzzle, every piece makes a difference. With the right checklist, you can fill in all the missing pieces of your puzzle and feel confident in your abilities to take it apart and do it again. We, at Olson Associates, have put together a checklist to help you get started.
Examine Current Financial Goals and Standards
Before we make new goals, we need to review the ones we already have. As you are reviewing, there are a few questions you should ask yourself. Has anything changed in your financial status? This is an ideal moment to reflect on any financial gains or losses you have accumulated in the last year. Do the goals and standards still meet your wants and needs, or do they require modification? In doing this, you are allowing yourself to determine what is most important to you; whether it’s credit building or financial security, it is helpful to understand where you are financially in order to turn small goals into big milestones.
It is also crucial to consider any big expenses you may be incurring now or in the future. This will help you know how much you may need to save. You can also set up a review session with a financial advisor to gain insight on tips and tricks that will benefit you. It may benefit you to write down one financial win from the past year, one future goal, and one expense to adjust. Regardless, going over your previous goals and making new ones will help you get off to a good start in 2025.
Review Your Finances as a Whole
Knowing your checks and balances, literally, will allow you to have a smooth sailing process in these big budgeting waters. It is helpful to know things like your credit score, debt totals, checking and savings account balances, current and monthly expenses, as well as future expenses. These factors play a significant role in your finances as a whole.
Another helpful tip is making sure you are maximizing your contribution limits to your tax-advantaged accounts, such as 401k, 403b, 457, IRA, or HSA. Each dollar contributed helps lower your taxable income giving you tax relief and more assets for your retirement. By capitalizing every option when checking your finances, you are on the path to building a strong future.
Take Control of Your Debt
According to a report done by Experian, in 2024 the average household debt is about $104,215. Most of this debt includes things like mortgages, HELOCs, auto loans, student loans, and credit card debt. If you want to start your year off right, you should be working towards reducing as much debt as possible. There are two ways you can go about paying debt off. You can either prioritize paying off your highest debt amount while still meeting the minimum payments on your other debts (debt avalanche strategy), or you can prioritize paying the lowest debt amount first (debt snowball strategy).
The debt snowball strategy will help give you momentum to pay off more debt while the debt avalanche strategy will help you take down larger amounts. Whatever strategy you decide to go with, a helpful tip is to list out all of your debt, including interest rates, and decide which ones you are willing to pay off first. Then you will be able to get the ball rolling and take control.
Adjust Your Budget
Your budget acts as the base of financial progress, so that means it is worth reviewing as the new year begins. Have your expenses shifted at all? The average cost of living goes up about 2.5-3% each year (Social Security Administration, SSA.gov). With that being said, you should consider your typical spending, like gas or groceries, as well as any new or unexpected expenses, like home improvements or auto replacements. Then you should adjust your budget, with the increase, in order to have a more accurate spending limit. Think of it as a refreshment, not a restriction. You are simply allowing yourself to expand your options, ultimately creating a stronger and more secure financial future.
Schedule Financial Checkpoints
Mark your calendars with specific dates to evaluate your progress throughout the year. Keeping an eye on your finances regularly is essential for maintaining control and making timely adjustments. Aim for monthly or quarterly reviews with a financial planner. During these reviews, assess your progress, acknowledge your successes, and make any necessary changes. These check-ins will help you stay aligned with your goals and help you maintain your priorities.
Get On Track Financially For 2025
Getting on track can be hard and staying on track can be harder. With the right advice and checklists, you will be able to feel safe, secure, and sure of your financial decision making in 2025. If you need financial advice to help prepare you for retirement, contact us at Olson Associates at 770-740-8744 or visit our website https://www.olsonretirement.com/. We aim to demystify retirement by guiding you through the various intricacies of investment strategies, asset allocation, and retirement decisions. We will help empower you with informed choices that will assist you in creating a strong and reliable future.
Sources:
https://www.businessinsider.com/personal-finance/credit-score/average-american-debt
https://www.ssa.gov/oact/cola/colaseries.html
Securities offered through Osaic Wealth, Inc. member FINRA/SIPC. Investment advisory services offered through OLSON ASSOCIATES. Osaic Wealth is separately owned and other entities and/or marketing names, products or services referenced here are independent of Osaic Wealth.