Ring in 2025: Budgeting for the New Year

Are you ready for 2025? The new year is a great time to think about your spending and saving habits. In fact, making changes to money habits and saving more is the top New Year’s resolution! But financial wellness goals aren’t always intuitive– so let’s take some time to think about how last year went and what you can do to make next year even better. 

Reflect on 2024’s Financial Wellness

Before the ball drops into 2025, you need to think about how you spent your money in 2024. Where did your money go? Did you spend more of it than you wanted to, or did you come in under budget? Your bank statements and any budgeting apps you use can help you spot spending patterns. 

You should also take the time to be honest with yourself about what your savings or investment goals were, and whether or not you met them. Maybe you had goals that you met, and that’s wonderful! But if you didn’t, or if you’d like to refine your goals, it’s worth it to take the time and think not just about what your financial goals are, but how you’re going to get there. 

Set Clear Financial Goals for 2025

One of the biggest hurdles to meeting financial goals is actually setting them. When we set vague goals or goals that are too lofty, it’s really easy to just give up because they seem completely unmanageable and unrealistic. However, when you approach goals as a series of steps instead of one big end goal, they become much easier to fulfill!

First, consider your short and long-term goals. A long-term savings goal might be contributing to a retirement fund or down payment on a home, while shorter term goals might be setting aside money for a summer vacation, emergency fund, or future investments. Outline your goals on a calendar and consider the relationship between money and time. For a lot of us, it’s unrealistic to treat housing as a short-term goal, but as a long-term goal, it makes perfect sense. 

Another way to think about goals is SMART goal setting. SMART goals are goals that meet a set of characteristics: Specific, Measurable, Achievable, Relevant, and Time-Bound.

• Specific: Define clear and precise objectives. Answer the “who, what, where, when, and why” of the goal.
• Measurable: Include criteria to track progress and measure success. Use numbers or specific benchmarks.
• Achievable: Set realistic goals that challenge you but remain attainable with available resources.
• Relevant: Ensure the goal aligns with broader objectives or values. It should be meaningful and worthwhile.
• Time-Bound: Establish a deadline or timeframe to maintain focus and create urgency.

Each of these characteristics makes the goal much easier to achieve. See, goals with nebulous, undefined terms might be simple to set, but are extremely challenging to meet… because you don’t actually know when you’ve met them. For example, the goal “I want to save more money” is easy to come up with, but what exactly does “more” mean here? “I want to put 10% of every paycheck into a savings account in 2025” is actually much more likely to happen. It has a specific objective, a measurable amount of money, a realistic proposition, and it’s time-bound; once a pay period for one year. As for relevance, that’s up to you– only you know what you’re saving for! 

Build a Realistic Monthly Budget

Budgeting is important but can be challenging, especially if you’ve never had to think about it before. Building a realistic budget is a great goal for college students or young people to build their financial literacy. But how do you budget appropriately? 

The first thing to do is categorize your essential and non-essential spending. You’ll have essentials, like housing, utilities, transportation, and groceries that are likely going to be about the same from month to month. After you’ve paid those, you’ll have money left over for saving or discretionary spending, like dining out and entertainment– the nonessentials. 

Another technique that many people find helpful is creating monthly allocations. This means adding a specific amount to different areas like savings, debt payments, and entertainment. This can help keep spending in check and encourage you to be diligent with saving. 

Plan for Seasonal Expenses and Special Occasions

Sometimes there’s extra spending in our future that we can predict. Special occasions like birthdays and holidays often get overlooked in the budget, which can lead to overspending. If you make sure these are in your budget from the start, you will be able to plan around these dates more effectively. 

When you know a big purchase or spending occasion is coming, you can start early and get ready for it. Instead of scrambling as the big day approaches, put money towards it monthly. A little bit out of each month’s funds is easier to adjust to than a bigger chunk out of funds right before the occasion!

Debt Reduction Strategy

Another smart financial goal is paying down debt. If you’re going into 2025 with debt, the new year is a perfect time to work on reducing it. Two good ways to do this are the snowball and avalanche methods. With the snowball method, you start with the smallest debt first. You’ll pay the minimum on all debts except the smallest, and put any extra funds towards paying off the smallest one. Then after it’s all paid off, you’ll roll that debt’s payment amount into the next smallest. 

The avalanche method sees you prioritizing debt with the highest interest rate first, with you paying the minimum on all debts except the one with the highest rate. Once that one’s paid in full, you move to the next and so on. Both of these methods work well for paying off debt effectively. 

Responsible credit card use is also a good goal for 2025. Credit cards have their place and can be very helpful, but they can also lead to overspending if you aren’t careful and you don’t pay attention to your credit card use. When you stay within your budget, you can avoid increasing your debts in the new year. 

Emergency Fund Planning

Emergency funds are important, and making sure that yours is prepared is a very smart financial goal. Everybody should have 3-6 months’ worth of expenses saved to cover unexpected financial challenges. It’s always a good idea to add to your emergency savings, and automatic transfers make it so simple to make regular contributions to this fund. A little bit at a time adds up quickly!

Retirement and Long-term Savings Goals

Planning for retirement and setting long-term savings goals is how you’ll secure your financial future. One smart strategy is to increase your retirement contributions whenever possible, such as after receiving a raise or bonus. Even small increases impact your savings over time due to the power of compound growth. Additionally, if your employer offers a 401(k) match, make sure that you contribute enough to take full advantage of it– it’s essentially free money that boosts your retirement fund!

Monitor and Adjust Throughout the Year

Once you’ve set financial goals, you need to remember that budgeting isn’t a one-time exercise; you need to take another look and adjust from time to time! Life can bring lots of surprises. Sometimes it’s unexpected expenses; other times, it might be an inheritance, a raise, or a new source of income. You’ll need to make adjustments when these things happen in order to stay on track. 

Use Technology to Stay on Track

Many of today’s financial wellness strategies have gone digital. Digital tools, like banking and budgeting apps, help keep track of spending and saving. And make sure to use mobile banking features to help stay on track, like the online banking and bill paying services Casey State Bank provides. So much of our money is managed on our mobile devices, and banking apps make tracking it easy.

Building a Bright Financial Future with Casey State Bank

No matter where you’re starting, remember that small, consistent steps can lead to significant financial improvements over time. Whether it’s planning for expenses, building an emergency fund, or paying down debt, all of your actions contribute towards your financial goals. Budgeting is more than just tracking numbers– it’s a powerful tool that helps you feel more in control and secure about your finances. With patience and persistence, you can create a financial plan that supports your long-term goals! 

At Casey State Bank, we’re here to support your financial goals. Check out our savings account options if you want to start or increase your savings activity in 2025, and get ready to ring in the new year with financial success!