How to deal with debt, according to a personal finance expert

Why Prioritizing Your Financial Well-Being in 2025 is Important

This year, why not prioritize your financial well-being?

The start of a new year is the perfect time to take control of your finances and set yourself up for success. Whether you’re recovering from holiday spending or simply looking to make smarter financial decisions, a fresh approach can help you achieve your goals.

Taking a moment to reflect on your current habits, set achievable goals, and create a realistic plan can make all the difference in building financial confidence.

Practical Tips to Reset Your Finances in 2025

Below, I’ll share practical tips to help you hit the reset button and start the year with a solid financial foundation.

1. Use your current finances as a baseline

If you’re like many, you may be starting off the new year with a not-quite-so-satisfied feeling about your finances. The first thing you should do moving into 2025 is to record your current finances. Take screenshots or write down the following:

• how much you have saved the past year
• how much you have earned the past year
• how much you have invested the past year
• how much debt you currently have
• the current balance of your bank accounts

This will be your baseline, and it should be your goal to maintain the good habits you’ve kept up with and improve the areas where you feel you’ve fallen short.

2. Reflect on your financial habits

Now that you’ve got a baseline to work with, take a few minutes to reflect on some of the habits (good and bad) that got you to that baseline.

Here, it can be a good idea to journal and take written notes so you can begin to formulate an action plan to make the changes you want to see.

3. Be brutally honest with yourself

While reflecting on your habits, start by writing down all of the small things that you could do differently to put yourself in a better position. Be brutally honest with yourself and realize the areas that you neglected.

At the same time, give yourself credit for the positive habits or financial steps that you may have taken through the year.

4. Set SMART goals for yourself

Using the SMART framework is a great way to make sure that your new financial goals are both actionable and achievable.

SMART stands for Specific, Measurable, Achievable, Relevant and Time-bound. Break larger goals into smaller milestones to stay motivated.

5. Create a realistic budget

Creating your budget starts by assessing your income and expenses to understand where your money is going. Use the 50/30/20 rule to allocate your income accordingly.

Modern banking and budgeting apps can help you track your spending and stay on budget.

6. Be strategic about debt reduction

Start by prioritizing high-interest debt and consider a debt consolidation loan if needed.

7. Simplify investing and saving

Automate your savings and investments to make it easier to reach your financial goals.

8. Give your actions time to compound

Resetting your finances will take time. Stay patient and consistent, and remember to revisit your goals to stay motivated.