The new year means New Year goals. A new study shows financial resolutions are a popular choice.
According to Fidelity’s Financial Resolutions survey, 66% of Americans are considering a financial resolution for the new year. That can be saving more, getting out of debt, building credit, saving for emergencies, and bolstering your nest egg.
Financial health can also help your mental and physical well-being. Are you considering adding financial resolutions to your New Year’s goals? Here are the top five financial resolutions to consider for 2025:
1. Create a budget
Budgets are a simple yet powerful tool for managing your finances. You can see exactly where your money goes by tracking your income and expenses. This clarity helps you prioritize your spending, identify areas to cut back and save more.
Creating a budget doesn’t have to be complicated. Many free online tools can help you easily categorize your expenses into fixed costs (like rent and utilities) and variable costs (like groceries and entertainment). They also let you set spending limits for each category, track your spending, and adjust as needed.
2. Get out of debt
Debt can be a significant stressor for many people. In fact, according to the Federal Reserve, 77% of Americans carry some debt. Not all debt is created equal, however. Some types of debt, such as student loans or mortgages, can be considered “good debt” due to their potential long-term benefits (like a degree or a home).
Other types of debt, like credit card debt or high-interest personal loans, can quickly spiral out of control. According to TransUnion, the average credit card user carries a balance of over $6,000 – the highest in a decade. So, it’s no wonder paying off credit card debt is one of people’s top resolutions.
You can take many proactive steps to become debt-free, even living paycheck to paycheck. To effectively manage your debt, assessing your financial situation, creating a budget, and prioritizing high-interest debts is crucial. Consider exploring debt repayment strategies like the avalanche or snowball method to accelerate your progress.
Credit counseling, debt consolidation, and debt management programs can help you achieve your goals if you’re struggling to manage debt independently. You can overcome debt and achieve financial freedom by taking proactive steps and staying committed.
3. Check Credit Score
Knowing your credit score helps you understand your financial health and make informed decisions about loans, renting an apartment, or getting a job. The good news is that checking your credit score is quick, easy, and free. Websites like AnnualCreditReport.com give you a free credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once a year.
Myth Buster: Checking your credit score doesn’t hurt it! It’s simply a way to stay informed. By regularly monitoring your credit report, you can identify errors and take steps to improve your score if needed.
4. Build an emergency fund
Life is unpredictable, so having a safety net that can help you weather unexpected financial storms, such as job loss or medical emergencies, is essential. Without an emergency fund, you may be forced to rely on credit cards or loans to cover unexpected expenses, potentially leading to a cycle of high-interest debt.
To start building your emergency fund, create a budget to identify areas where you can save. Open a savings account, preferably one that earns interest, to keep these savings separate from your regular income. Next, set a realistic goal. Aim to save 10% of your monthly income and build a fund that covers nine months to a year’s worth of living expenses. You can safeguard your financial future and gain peace of mind by taking proactive steps.
5. Start Saving for Retirement
People often procrastinate when it comes to saving for retirement, so prioritizing it and making this one of your New Year’s goals is a smart choice. The first step is to open a retirement savings account and start saving!
To maximize your retirement savings, start early and prioritize consistent contributions. Take advantage of employer-sponsored retirement plans and maximize your employer match. Automate your savings to ensure regular contributions.
If you’re eligible, consider a Roth IRA, which offers tax advantages for qualified retirement withdrawals. Consult with a financial advisor for personalized advice and to create a tailored retirement plan. You can work towards a comfortable and secure retirement by taking these steps.
Final Thoughts
By prioritizing these financial resolutions in 2025, you can take control of your finances and work towards a brighter future. Don’t get discouraged throughout the year! Remember, even small steps can lead to significant results.
