New Year, Fresh Start to Finances
I love nothing more than a fresh start. Shake it off. Learn from my mistakes. Try new things. Look for the upgrades in life. The new year is a great time for a fresh start and many people want to improve their relationship with money in 2025. I’d like to give you my tips and tricks on how you can launch into the new year and get some upgrades to your personal finances.
Set three financial goals. Write down everything you would like to accomplish this year. How many of them have a financial component? Narrow this down to your top three goals. Start to figure out how you can fund each of these goals on a monthly basis. Too many goals drags us down. Three is the magic number. Write them down. Fund them. Watch yourself reach your goals every year!
Get clear on your values. What do you value most? Personally, I like to aim for growing assets, setting my kids up for success, and traveling. So, I determine how much money I can invest and how much money I need to take my travel adventures. Since my kids’ 529 plans are set up and doing well, the “setting them up for success” value is more about my parental involvement and less about money. What do you value? What is important to you in your life? Write down your values and think about how to support them with funding. This makes it easier to accomplish the next item, Budgeting!
Budget. A common thing I hear from clients is, “I know I am doing OK financially, but I never seem to have money for ______”. This tells me immediately they are not using a budget (I like to call it a “spending plan”) and they aren’t funding their values and goals first. Probably, they have too many subscriptions, eat out too much, or have a daily coffee habit. If you think you can be successful with your finances and not track your income and spending against a budget, you are sadly mistaken. This is a huge barrier and hang up for most people. However, for those who can master the task of adhering to a budget, they have financial success much faster and a lot less personal stress. This is about being the master/CEO/captain/king/queen of your money. Rule it. Don’t let it rule you.
Get an HYSA. Do you have a savings account? Is it paying you around 4% right now? If not, you need to shop for an online high yield savings account. This is where you should store money for emergencies and other value-focussed purchases that are not monthly expenses. These are things that you will spend your money on in the near future. I have one HYSA and it stores my emergency money and a whole bunch of “money buckets” for things I want to spend my money on this year. I only keep money in my checking account for regular monthly expenses. If you have a surplus of cash sitting in a checking account, do yourself a favor and get a HYSA today.
Contribute to retirement. All of us should be contributing a minimum of 10% of our income towards retirement. If you are not doing this, make this a priority. With employers contributing less and less to employees’ retirement and the insolvency of Social Security funding poised for the near future, you have got to save your own money for retirement. The days of living off a pension or Social Security for most of us are long gone. If you don’t have retirement accounts offered at work, set up your own IRA (Individual Retirement Account). It’s easy to do. Just make sure the money you put in your IRA is invested and don’t leave it sitting in cash. I’ve seen that way too many times!
Build your emergency fund. Do you have 3-6 months of mandatory expenses set aside in a savings account? If not, this is a hugely important tool for getting a fresh start with your finances. What are mandatory expenses? Everything you absolutely need to pay for every month: Housing, utilities, food, car, insurance, loans, etc. When we don’t have emergency funds, we wind up putting emergencies on a credit card. This is why people are stuck in a cycle of bad debt. Getting a properly-funded emergency savings account is really the first critical step to building wealth.
Earn rewards on credit cards. I know there is a ton of noise out there about credit cards being bad. They are not bad and they are a tool I personally use to make money. Get a rewards credit card that doesn’t charge an annual fee. Mine pays 2% cash on everything I buy with it. All I have to do is pay it off in full every month. Get yourself into a spot where you are making money off your credit card instead of paying steep interest rates.
All of these are fantastic ways to get a fresh start with your finances in 2025. Even if you just focus on one of these, you will have made some great progress. And, if you want some help working on this with a professional coach who can guide you and give you some needed accountability, I’m just a click away. Set up your free Q+A with me here.