How to Make Sure Your Finances Look Completely Different One Year From Now

There’s never a bad time to make steps to overhaul your finances, but the start of a new year is a particularly good one. If you’d like your finances to look a whole lot better by the end of the coming year, follow our three-step plan.

Have a Huge Tidy Up

It’s easy to let finances get messy, so the first thing to do is take a step back and assess the big picture. List out your most important numbers such as:

• Income
• Outgoings
• Savings (including interest rate being earned)
• Debt (including interest rate being paid)
• Investments
• Net worth

If your income is inconsistent, note down projected income for the next 12 months as well as some income goals that you’d ideally like to hit.

Once you have an overview of your finances it’s easier to see how you can improve things.

Set Your Goals

These will be personal to you but one important aspect of them is they should be specific, and include the “How” as well as the “What”.

If you’re increasing income, how are you doing that, exactly? Note down the actual daily, weekly, and monthly actions you need to take to reach those income goals.

If you’re aiming to save more, then which expenses will you cut? Investing more this year? Where’s that money coming from?

If you have debt to pay down, how will you do it? Avalanche or snowball method? Do you need to consolidate debt first? Or maybe move consumer debt to a 0% credit card.

Are you missing out on any tax benefits? Could you be paying into a Health Savings Account, for example or an FSA to help with childcare. (These may or may not apply to you right now — just check out anything that you could be doing to make sure you’re not missing out.)

Look at the small stuff as well as the big. Is your home pretty cluttered with stuff you just don’t need right now. How about selling it? Where would you do that? How much could you get for it?

Don’t be afraid to make big moves, too. Increasing your income or cutting your expenses can mean drastic changes, like going for a new job, or downsizing your home if that makes sense for you. Put all your options on the table so you know which decisions are possibilities and what the payoff might be.

Invest in a Financial Journal

The year I started using a financial journal was the year my relationship with money changed completely.

I like the Kakeibo journal, personally. It encourages you to not just track your income and spending, but also reflect on how you use your money and why.

Using this journal, for me, created a sense of connection to my money, and led to more mindful, carefully considered spending.

Ultimately, this teaches you to use money to bring you joy. Too many of us spend mindlessly and end up with a feeling of anxiety around money, even if we basically have enough (and especially if we don’t). When we don’t know where our money went we just generally feel out of control and discontented.

A financial journal allows us to reflect each week or month on what we spent, and the pleasure that spending brought us. It also allows us to reflect on the spending that didn’t really bring us any happiness, and eliminate that from future plans.

That’s it. Three steps for a potential total overhaul of your personal finances in 2025.

Karen Banes is a freelance writer specializing in entrepreneurship, parenting and lifestyle. She writes articles, website content, ebooks and the occasional award winning short story. Her work has appeared in a range of publications both online and off, including The Washington Post, Life Info Magazine, Transitions Abroad, Brave New Traveler, Natural Parenting Group, and Copia Magazine. Learn More About Karen