As we move into 2025, it’s essential to re-evaluate your financial strategy to ensure you’re staying on top of rising costs and achieving your financial goals. Experts suggest that simply copying your 2024 budget isn’t enough to set you up for success. Here’s a step-by-step guide to refresh your finances and start the year with a clear financial plan.
1. Audit Your Past Year’s Spending
Start by reviewing your spending from the previous year. Jessica Morgan, founder of Canadianbudget.ca, emphasizes the importance of auditing your expenses to identify patterns and areas for improvement. If you haven’t tracked your spending throughout the year, now is the time to go back through your bank and credit card statements to get a clear picture of your financial habits.
2. Evaluate Subscription Costs
Many people sign up for services that they no longer need, and these fees often rise without notice. Morgan advises reviewing all your subscriptions—such as streaming services, apps, and digital memberships. Take this opportunity to cut out any unnecessary costs, and ensure you’re not paying for something you’re not actively using.
3. Negotiate Bills
Negotiating bills can help you lower recurring expenses. Janine Rogan, a chartered professional accountant, suggests negotiating phone plans, insurance costs, and even bank fees. If negotiation isn’t an option, consider “adding value” by increasing your plan’s data or services, which may come at a better rate.
4. Set Financial Goals for 2025
Once you’ve done your audit, it’s time to set new financial goals. Whether it’s saving for a vacation, buying a car, or maxing out your tax-free savings account (TFSA), setting clear objectives will give you direction. Rogan suggests breaking down large goals into monthly contributions. For instance, to max out your TFSA for 2025 (with a limit of $7,000), you’ll need to set aside $583 each month.
Automating these savings makes it easier to achieve your goals. Regular contributions will ensure you stay on track without feeling overwhelmed.
5. Prepare for Tax Season
Tax time can be a stressful financial burden if you’re not prepared. Rogan advises estimating whether you’ll owe taxes by using a tax calculator with your final paystub from the year. Doing this early in January will give you plenty of time to save up, so you’re not scrambling in April. This is especially important for freelancers or those without tax withheld by an employer.
6. Adopt a Holistic Budgeting Approach
Rogan recommends looking at your finances on a quarterly or annual basis rather than on a strict weekly or monthly budget. This approach provides more flexibility for unexpected expenses and income fluctuations. Having a long-term view allows you to manage your finances better, even if things don’t go exactly as planned.
7. Check in Regularly
A successful financial plan requires regular monitoring. Set aside time each week, bi-weekly, or monthly to check on your budget and adjust if needed. Kelley Keehn, a financial educator, suggests involving a “finance buddy” to hold you accountable, whether it’s a spouse, friend, or financial advisor. Setting regular financial check-ins throughout the year ensures your goals stay top of mind.
8. Pick a Tracking Method That Works for You
As the cost of living continues to rise, keeping track of your finances has never been more important. Morgan encourages you to choose a method that suits your lifestyle, whether it’s a budgeting app, spreadsheet, or good old-fashioned pen and paper. The key is consistency and starting early to ease the burden later in the year.
Final Thoughts
The start of a new year is the perfect opportunity to refresh your financial strategy. By auditing your past spending, setting clear goals, and preparing for unexpected expenses, you’ll put yourself in a strong position for 2025. Remember, the goal is to make your financial life easier throughout the year, so take small steps now that will make a big difference later.
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