At the start of the new year, many of us reflect on our financial goals and how to manage our money better. Whether aiming to save more, invest wisely, or get out of debt, starting 2025 on the right financial footing is key. Here's our guide to help you make this your most financially savvy year yet.
1. Review your financial year
Before setting new goals, take some time to reflect on your 2024 finances. Consider the following points:
- What worked well? Did you maintain your budget, grow your savings, or pay off debt?
- What didn't work? Identify the areas where your spending got out of control or where your savings goals fell short
- Track your net worth. Understanding your financial position is a crucial starting point for future planning
Next, summarise your 2024 finances, including your income, expenses, savings, and debts. Tools such as budgeting apps or simple spreadsheets can help organise this information
2. Set SMART financial goals
Vague resolutions like "save more money" won't cut it. Instead, use the SMART framework, which stands for:
- Specific - define your goal, e.g. save $10,000 for a new car
- Measurable - break your goals into trackable milestones
- Achievable - ensure your goals align with your income and lifestyle
- Relevant - prioritise goals that fit your financial aspirations
- Time-bound - set a deadline for each goal
Then, write down 3-5 financial goals for 2025. These could be:
- Build an emergency fund of $5,000 by June
- Pay off $7,000 in credit card debt by October
- Contribute $3,000 to a holiday fund by year-end
3. Create a 2025 budget
A budget is your financial roadmap. Begin by calculating your total income, including all sources like your salary, side hustles, and investments. Next, assess your expenses by reviewing last year's spending to distinguish between essential versus discretionary costs. Finally, set aside a portion of your income for savings. Consider using the 50/30/20 rule as a guide for allocating your budget:
- 50% for necessities (rent, utilities, groceries)
- 30% for discretionary spending (entertainment, hobbies)
- 20% for savings and debt repayment
4. Tackle debt strategically
Debt can derail your financial goals, so make it a priority. To get the complete picture, list your debts, including interest rates, minimum payments, and total balances. Then, choose a debt repayment strategy that best suits you and your circumstances. This could include the snowball method, where you pay off the smallest debt first for quick wins, or the avalanche method, which focuses on paying off high-interest debt to save more long-term. Set up automatic payments so you never miss a repayment due date, and consider debt consolidation to reduce interest rates.
5. Boost your income
If your financial goals feel out of reach, consider how you could increase your earnings. If you've excelled at your job, negotiate a pay bump by asking for a raise. Or you could start a side hustle - from freelancing to selling handmade goods; there are plenty of opportunities to earn extra cash. Upskilling through courses or certifications can also enhance your earning potential (and investing in yourself is never a bad idea). Why not start by researching one new income stream you can start in 2025?
6. Automate your finances
Make saving and paying bills effortless by automating contributions to your savings accounts and setting up autopay for recurring bills to avoid late fees. You can also use apps that round up purchases to the nearest dollar and invest the difference.
7. Invest wisely
If you haven't already, start or grow your investment portfolio (either by adding to your Super or through a separate investment strategy), and commit to investing a set percentage of your income each month. Keep in mind these golden rules:
- Diversify - spread your investments across different asset classes
- Research - understand your risk tolerance and the options available to you
- Seek advice - consult a financial advisor if unsure where to begin
8. Prepare for the unexpected
Life happens, and being prepared is part of being money-smart. You'll be better able to manage unforeseen expenses if you conduct a financial health check to review your preparedness for emergencies and:
- Build an emergency fund (aim for 3-6 months of living expenses)
- Insure wisely (review your health, life, and property insurance policies)
9. Track progress monthly
Stay on top of your goals by monitoring your progress regularly, and set a monthly calendar reminder for a personal finance review. During this, you should:
- Review your spending and look for areas to cut back
- Check your savings and ensure you're on track with milestones
- Adjust as needed - life is unpredictable, so be flexible
Get started today!
Starting 2025 with a money-smart mindset isn't just about resolutions - it's about building habits that will lead to financial freedom and security. With a clear plan and consistent effort, this could be your best financial year yet.
But if you are in a financial bind and need a fast and friendly helping hand, we're always here. Take a look at our cash loans up to $5,000 to find out how quick and easy it is to get your hands on some extra funds. Once a loan is approved, the cash is usually in your bank account within a few hours - so you can get on with life. Here's to a prosperous and money-smart 2025!