Personal Financehxdbzxy / Shutterstock.comDavid BerenThe good news is that the start of a new year is an opportunity to review your finances. Think of 2025 as a new chance to re-evaluate how much you want to earn, spend, and save and focus on your next life goals, including retirement, big vacations, or buying a home. [keynotes]The challenge is that a new year could mean new money mistakes for many people. As much as you may want to think of 2025 as a new opportunity, old money habits can be hard to break. Easy things like not following your budget are just one of many financial pitfalls you’ll want to avoid in the new year. Neglecting Emergency SavingsThe first pitfall you will want to avoid in 2025 is choosing a savings resolution and ignoring it. This is the most common financial resolution for people of all ages, as they want to put more money into an emergency savings account. One of the biggest mistakes anyone could make in 2025 is overlooking the need for an emergency fund. While we’d like to understand the economy is moving more and more toward a recovery with inflation lowering, there is still uncertainty ahead. The biggest consideration and mistake you can make is not being prepared for unexpected expenses. A large car expense, medical bill, or home repair can throw your path toward financial stability off track. What the Experts SayMost financial experts say you should have 6-12 months of expenses in a savings account. A good financial advisor would tell you to put this money into a high-yield savings account to earn interest. Just make sure you are avoiding dipping into the savings for non-emergency expenses. Overspending On New Year’s Resolutions One of the most common New Year’s resolutions is to get in shape, so people often overspend to get fit. This might include buying a Peloton, something I can speak from personal experience. At the start of 2021, while still in the middle of a pandemic, my wife and I bought a Peloton, thinking it would be a great way to get into shape. Unfortunately, it was more fun to watch than to do, so off the Peloton went, at a slight loss, a few months later. The better option here is to start small by taking advantage of some low-cost options like walking, running, or using online workout videos you can find on YouTube. Try a free gym membership for a week and see if it’s something you think you will commit to before signing on the dotted line. Ignoring Debt Repayments A common mistake people make in the new year is to commit to paying off debt, specifically high-interest debt, but continue only to make minimum payments. The problem is that interest rates aren’t decreasing, so everything about your debt is becoming more expensive. Snowball MethodFinancial expert Dave Ramsey offers great insight here with his “debt snowball method,” which can be great advice for starting in 2025. To look at your debt, list it in descending order from the smallest balance to the largest. Start
Sab. Gen 4th, 2025
