Did you know that ‘setting financial goals’ is the second most popular New Year resolution topic after health and fitness? This change can be attributed to the events of the last few years, such as the pandemic or the economic crisis (looming recession and high cost of living and inflation).
If you plan to reduce expenses this year, pay off your debt, or start saving for retirement, this guide will come in handy. Before we discuss some of the top financial resolutions to make in 2025, let’s discuss some common mistakes you can avoid to maintain consistency.
Many of us are guilty of giving up on our resolutions, a few months into the year. This will not just set you back on your overall financial goals but can make you feel dejected and disappointed for the rest of the year.
So, what can you do to not lose sight of the bigger picture? Let’s take a look!
How to Stay on Track With Your Financial Resolutions
To make sure you follow through with your resolutions in 2025, we have created a checklist that’ll help:
Write down your resolutions to stay consistent
Simply, keeping your intentions in your mind can make you forget it not to mention your accountability to yourself will be low. Pin up your list of resolutions on your desk at the office, in your cupboard at home or on your PC. Visualising it every day and reading it will keep you motivated to do what needs to be done to achieve your goals.
Have an accountability buddy
You can nominate a close friend, partner, sibling or professional financial advisor. They can be your cheerleader on the days you feel like giving up. When you have someone to report your progress to, you are more compelled to give your best shot. A professional can also offer saving strategies and tell you about the best schemes.
Follow the SMART (Specific, Measurable, Achievable, Realistic and Time-bound) method
This will help you gain clarity and better monitor your progress. For example, don’t just write save money, instead write a SMART financial resolution. It can look like this- Save £100 every month towards emergency funds to reach £1200 by the end of the year.
If it’s not specific and fleshed out – you are very likely to not see it through
Top Financial Resolutions for 2025
1. Pay Off Debt or Close Your Overdraft Account
If you have loans, mortgages or credit card dues, prioritise repaying them first. Overdraft accounts also acquire interest daily making it extremely challenging to pay back. If you have substantial debt pending this is the best financial resolution you can stick to.
You can return debt using either the avalanche (pay off debt with high interest) or the snowball (return a small amount first) method. Try to pay more than the minimum payable amount. Expediting debt payments will help improve your credit score, eventually leading to a debt-free life.
2. Create an Emergency Fund
In the current economic climate, where the cost of living has skyrocketed and job stability has become uncertain, it’s important to proactively work towards securing your financial future. The best way to do this is to build an emergency fund.
Emergency funds constitute your essential living expenses, if you are single, save for at least three to six months. Those with a family or dependents need to save for a minimum of six months or more. If something unfortunate happens like losing your job or becoming critically ill you’ll have enough money in your account to pay for groceries and utilities until you bounce back.
3. Boost Your Income
Whether you want to retire early and live comfortably in your old age or plan to buy a home, the best way to achieve this is by increasing your income. This can be done by taking a new job or starting a side hustle.
Invest in upskilling or reskilling yourself. For example, you can acquire copywriting or graphic design skills if you work as an SEO specialist. This will help you get better-paying jobs or even work as a freelancer during the weekend.
Substantiating your income doesn’t mean spending more, it means you can save more for your future.
4. Budget Your Expenses
When you set your financial goals for 2025, don’t forget to add a point for budgeting. The best way to reduce your expenses is to follow and stick to a budget. Reassess your current expenses and then work on how to reduce them.
Spend 50% of your salary on needs (food, utilities, rent and fuel), 30% on wants (eating out, shopping and subscriptions) and 20% towards savings (emergency funds, paying off loans and investments). The best strategy is to cut back on the wants section and add to your savings section.
Wrapping Up
We agree that financial resolutions can be tough to follow because they require a fair bit of self-control and planning. It can be tempting to give in to online shopping or splurging on the new eatery that everyone is raving about on social media. Additionally, financial goals take time to show results.
If you find yourself struggling to stay on track, create smaller goals that are easy to achieve and will help you stay motivated. Reward yourself when you tick off something from your list and be kind to yourself. It’s okay to sometimes buy a dress or shoes sitting in your wishlist.
Don’t beat yourself over it or give up on your overall objective because of one slip-up. Start saving today to secure your future. Take the first step and the rest will follow. The point is to get started and establish a rhythm that works for you.
