As the new year approaches, many of us resolve to make improvements in our lives—and our finances should be no exception. A financial check-up at the start of the year is a great way to ensure you’re on track to meet your goals. Whether you’re aiming to save for a dream vacation, pay down debt, or grow your investments, following a structured checklist can help you start 2025 with confidence.
Here’s a streamlined guide to kicking off your financial year on the right foot:
A budget is the cornerstone of any financial plan. Begin by assessing your 2024 spending habits. Did you stay within your means? Identify areas where you overspent and look for opportunities to cut back. Tools like budgeting apps or spreadsheets can make it easier to visualize your income and expenses.
- Unnecessary expenses: Check your bank statements for subscriptions you forgot to cancel or services you no longer use. Even small savings add up over time.
- Negotiations: Call service providers to request discounts or better rates. Many companies offer loyalty discounts or price-match competitors.
- Savings allocation: After reviewing your fixed and variable expenses, determine how much you can funnel toward financial goals like savings or debt repayment.
Clear, achievable goals give you something to work toward. Break your goals into short-term (1 year), medium-term (1-5 years), and long-term (5+ years) categories. Examples include:
- Short-term: Save $5,000 for an emergency fund. This could mean cutting discretionary spending or setting up automatic savings transfers.
- Medium-term: Pay off $15,000 in student loans. Consider consolidating loans or refinancing for a lower interest rate to speed up repayment.
- Long-term: Invest $100,000 for retirement. Maximize employer matching contributions or consult a financial advisor to optimize your investment strategy.
Using the SMART framework (Specific, Measurable, Achievable, Relevant, Time-bound) ensures your goals are realistic and actionable.
The earlier you invest in retirement accounts, the more time your money has to grow thanks to compound interest. For 2025, the contribution limits for 401(k) plans and IRAs may have changed, so check the latest guidelines.
- Employer match: If you’re not already contributing enough to get your employer’s full match, make it a priority. It’s essentially free money that boosts your retirement savings.
- Catch-up contributions: If you’re over 50, you may be eligible to contribute more to your retirement accounts. Take advantage of these higher limits.
- Automate contributions: Set up automatic payroll deductions to ensure consistency and make saving effortless.
No one likes to think about worst-case scenarios, but having an estate plan in place can protect your loved ones and ensure your wishes are honored.
- Update your will: Review or create a will that clearly outlines how your assets should be distributed.
- Designate beneficiaries: Check that your retirement accounts, life insurance policies, and investment accounts have the correct beneficiaries listed.
- Power of attorney and healthcare proxy: These documents ensure someone you trust can make financial or medical decisions on your behalf if you’re unable to do so.
- Seek professional advice: Consult with an estate planning attorney to address specific needs, like setting up a trust or minimizing estate taxes.
Tax season is just around the corner, and early preparation can save you stress (and money). Start gathering all necessary documents and consider ways to reduce your taxable income.
- Organize paperwork: Collect W-2s, 1099s, receipts for deductible expenses, and records of charitable donations. Having everything in one place simplifies filing.
- Tax deductions and credits: Look into tax benefits for education, energy-efficient home improvements, or retirement contributions.
- Adjust withholding: If you received a large refund or owed taxes last year, update your W-4 form to better align your withholding with your actual tax liability.
- Consult a professional: If your finances are complex, working with a tax advisor can help identify strategies to reduce your tax bill.
Taking control of your finances at the start of the year can set a positive tone for the months ahead. By tackling this checklist, you’ll not only build a strong financial foundation but also gain peace of mind knowing you’re on track to achieve your goals.
The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.
This content not reviewed by FINRA.
