5 Financial Goals to Set for 2025
Well, folks, we’ve made it! 2024 is in the rearview mirror, and 2025 stretches out toward the horizon before us. Now that we are well into January (happy Financial Wellness Month!), past the New Year’s revelry and have (hopefully) gotten past the holiday hangover, it is a good time to look at your finances and set some goals for 2025. Let’s not think of these as resolutions — I’ve seen too many people (myself included) lose motivation for resolutions in the early weeks of a new year. Instead, let’s make specific, achievable goals with measurable results that are relevant to your financial situation and can be completed within the year (for those of you who know about SMART goals, that is what I am describing here - Specific, Measurable, Achievable, Relevant, and Time-Based) and along the way we will build habits that can benefit our overall financial wellness.
Here are five practical, low-stress goals to work toward by the end of 2025:
Goal #1: Spend Less Than You Earn
Why It’s Relevant: You need income to meet your current financial needs and prepare for the future. By saving more than you spend, you can pay down debt, save money for future needs and wants, and invest money to prepare for retirement.
How to Achieve It: Check in with your cash flow. Look over your past three months of spending and saving to ensure you are not overspending. If you are overspending, identify the areas where you are overspending. What do you spend money on that adds real value to your life? Are there areas where you spend that do not bring any value? It’s not about austerity — if weekly coffee with a friend is what you look forward to most every week, then don’t give that up, but find an area of spending you may be ok letting go of or pulling back on.
For instance, I am a huge fan of diet ginger ale, but when I reviewed my spending, I saw that a significant amount was going towards buying 12-packs for home (a 12-pack can be up to $8.99!), and I was drinking several cans a day. When I saw how much money I was spending on diet ginger ale, I realized that the value I got from drinking it did not equal the price I was paying to maintain my habit. While I haven’t stopped drinking it altogether, I now drink it once or twice a week, meaning instead of buying 4-6 12-packs a month, I am now buying 1 or less 12-packs a month. Being mindful of the value I was getting from the purchase helped me to change my habits and make a financially healthy choice.
Be sure you have enough to pay bills on time, pay down your debt, and save money. If cutting back on spending doesn’t seem possible, see if there are ways to bring in more income, such as starting a second job, selling items you no longer use, or creating a passive income stream.
Set a measurable goal here. If you are already spending less than you earn, then you may want to set a goal to save a specific amount of your surplus by the end of a year for a specific goal (for instance, by the end of 2025, you may want to add an extra $2,400 in addition to what you already save for retirement, and you will do this by adding an additional $200 per month to your IRA). If you are spending more than you earn, your goal will be focused on getting yourself to a point where you spend less than you earn, meaning you may have to set a few specific goals to get there (for instance, I will narrow the gap between what I spend and what I earn by $100 this month by reducing my diet ginger ale consumption to once per week and doing some online freelance work in my spare time. At the end of each month, I will build on these goals by making a new goal to move myself closer to my ultimate year-end goal of spending less than what I earn each month).
Goal #2: Build (or Start) Your Emergency Fund
Why It’s Relevant: You never know when an emergency will pop up. We all saw how quickly the landscape can change in 2020. While we can hope we will not experience a global pandemic like the one we saw then, there is always the chance that something unexpected will come up. Whether you have an unforeseen medical bill, lose a job, or need expensive car or home repairs, an emergency fund can help you stay afloat when emergencies pop up.
The general rule of thumb for an Emergency Fund is to have 3-6 months’ worth of money set aside. It is best to put this in a high-yield savings account so that it can earn interest while still being easy to access if an emergency pops up.
How to Achieve It: Start by figuring out how much you would need by calculating your monthly expenses. NerdWallet has a handy Emergency Fund Calculator to help you figure out the amount you need to save. If you don’t have an emergency fund started, it may not be reasonable to expect to be able to save 3-6 months’ worth of income by the end of the year, so your first goal may be to save a specific amount or perhaps save up to one month’s worth of expenses by the end of the year. You need to find what is reasonable for you and then build it out over time.
Once you know how much to save, automate the savings so you don’t have to remember to move money to your savings account. Most banks allow you to set up savings rules with the money that comes in. For example, if you want $1,200 in your emergency fund by the end of 2025, you can set a rule to move $100 over to your savings account every month. If you leave that money there and don’t touch it, you will meet your goal by the end of the year.
Goal # 3: Pay Down High-Interest Debt
Why It’s Relevant: According to Lending Tree, Americans’ national average credit card debt was $7236 in the third quarter of 2024. Given that the current average credit card interest rate in January 2025 is $24.26%, that is a lot of money accrued in interest. Paying down these high-interest debts as quickly as possible is a critical step in preparing yourself to meet your financial goals.
How to Achieve It: There are two popular methods of thinking for paying down debt: the Snowball Method and the Avalanche Method, made popular by Dave Ramsey.
The Snowball Method
With the Snowball Method, you focus on your smallest debt first, meaning that you pay minimum balances on all of your debts and then throw as much extra money as you can at paying down your smallest balance first. Once you pay down your smallest debt, you focus on the next smallest debt. Again, I cannot emphasize this enough: you are always paying at least the minimum payment on all of your other debts and paying your regular bills so that you do not become delinquent; you are just focusing on putting extra money towards those smaller debts to get them paid off more quickly.
Hypothetically, it looks like this (all numbers are hypotheticals):
You have the following loans:
$15,000 car loan (minimum payment: $150)
$10,000 student loan (minimum payment: $100)
$4,000 credit card debt on card 1(minimum payment: $250)
$400 credit card debt on card 2 (minimum payment: $80)
In the Snowball Method, you pay all of your minimum balances for each account and then assess how much extra you can add to pay down the smallest balance, in this case, $400. In this case, you can pay an additional $320 per month toward your debt, meaning that you pay $80 (minimum payment for credit card 2) plus $320, or a total of $400 on credit card 2, meaning you can pay it off in the first month! Then, in month 2, you start paying down your next-lowest debt, adding the $400 you paid last month to the $250 minimum payment you make for credit card 1. Once that is paid off, you have an extra $650 to throw at your student loan, and once that is paid off, you have an additional $750 per month to throw at your car loan. The amount you use to pay down each loan snowballs as you pay off debts, giving you more money to pay off your remaining debts.
The Avalanche Method
With the Avalanche Method, you focus on your highest-interest debt. You pay the minimum balances on all your debts but then throw as much extra money as possible to pay down your highest-interest debt first. Once that is paid off, you focus on your next highest-interest debt.
Hypothetically, it looks like this (all numbers are hypotheticals):
You have the following loans:
6% interest on a $15,000 car loan
3% interest on a $10,000 student loan
27% interest on a $4,000 credit card debt on card 1
18.99% interest on a $400 credit card debt on card 2
With the Avalanche Method, you first focus on your highest interest-rate debt and assess how much extra money you can add to pay down that debt while paying the minimum on everything else. Once that is paid down, you take what you were paying on your highest-interest debt and add that to the minimum payment on the next-highest-interest rate debt. It may take longer to pay things down, but you will spend less on interest.
If you are a person who is encouraged by the little victories, the Snowball Method may be the right way for you to go — you will be able to pay the smallest debt down faster than the others, which may encourage you to keep going. But, if you are more patient, the Avalanche Method may work because you save money on interest by paying off the highest-interest debt first. But, the progress there is more incremental, so you need to focus on the end goal and avoid feeling discouraged.
Other Options
Some may advocate taking out loans or debt consolidation, but that is something for you to speak to a financial counselor about to learn about the benefits and drawbacks and see if it is the right option for you. If you have decent credit, you may be able to move some of your high-interest debt to a credit card that has a 0% promotional financing offer. In these cases, you transfer your debt to that credit card for a fee (usually 3-5% of the amount you are transferring), and then you have a certain amount of time where you pay no interest. This can be extremely helpful, but you must be aware of the terms of the loan so you know when that promotional period ends, the interest rate at the end of that promotional period, and if you get hit with retroactive interest if you don’t pay off the original loan amount before the end of the promotional period. Only do it if you know you can pay the debt within the promotional period. Do your research and proceed with caution.
Goal #4: Save As Much As You Can for Retirement
Why It’s Relevant: Putting money away now helps secure your future later on. By investing, you can compound your interest or dividends, making your money work for you. With some retirement accounts, there are tax advantages, and with some employer-sponsored accounts, employers may offer a match to what you invest.
How to Achieve It: If you don’t have an account, do research, speak to a financial advisor, and start one. Invest every month. Every dollar counts, and the earlier you begin to save, the larger the nest egg you will have when you retire. Even if you can only contribute $25 per month, that money will multiply over the years, and in theory, as you earn more, you will be able to contribute more.
If you already have an account, see if you can invest more. Speak with your financial advisor or the benefits people where you work and add some extra money there.
Goal #5: Review Your Insurance Coverage
Why It’s Relevant: As life changes, your need for insurance changes, and you need to ensure you are fully covered. Being underinsured can leave you financially vulnerable if the unexpected were to happen. And, even if nothing has really changed with your circumstances, you may be paying more than you need to pay if you haven’t checked rates in a couple of years.
How to Achieve It: Review your policies and understand your coverage. Talk to a licensed agent who can help you decide if you have the coverage you need. If you haven’t reviewed your policies in a while, ask your insurance company to re-quote your policy – you may be able to save some money. Also, seek quotes from other reputable insurance companies to see if they may be able to offer savings. If you work in particular industries, such as education, or are part of a union, you may get discounts with certain companies, so you may want to check into that.
Tips and Tricks to Stay Motivated
Keep track of your progress — use a method that works for you, whether it’s a spreadsheet or an app or getting a fancy binder and keeping track the analog way (i.e., without technology). I do love a well-designed, pretty, functional spreadsheet.
Celebrate the small wins. By recognizing and celebrating your successes, you are more likely to want to continue down the path to financial wellness.
Find an accountability partner, such as a trusted friend. If you tell someone you will do something and they check in with you about it, you are more likely to stick with it.
Tackling these tips and tricks at the beginning of 2025 can set you up for a more financially stable 2026. Imagine ending this year with less debt, a more robust emergency fund, and more money in savings. How will that feel?
Which tips and tricks are you likely to start with?
Need some help staying motivated? Schedule a free consultation with Gentle Fearless Coaching and Consulting to see if a Confidence Coaching Package focusing on Financial Literacy is right for you!
*This article is for informational purposes only and should not be construed as specific advice. I am not an accountant or financial advisor, and information on this site is not a substitute for information provided by a professional who is familiar with your situation or unique needs.