Financial goals to set for 2025

With a new year comes new plans and new responsibilities and, if you're going to keep all of those on track, some new spending and saving habits, too.

While reassessing your finances "may not seem as exciting" as other turn-of-the-year resolutions, better financial wellness is "often closely connected to your physical and mental health", said wealth-management firm Morgan Stanley.

And the "good news" is that bettering your financial status "might be easier than you think". Just by following a few simple steps, you could find yourself on a much firmer money footing by this time next year.

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Pay off debts

Repaying any debts should be "your priority" if you are keen to turn your finances around in 2025, said The Times Money Mentor.

Start by putting your debts in order of priority, with debts "that could cost you your home, or land you in court" at the very top.

Next comes the "most expensive debt". Interest paid on credit cards, loans and overdrafts are "often much higher than the interest earned on savings", said MoneySavingExpert, so if you can pay off these debts with savings, "you'll usually be better off".

Free support for those who are in debt is available through charities such as StepChange and Turn2Us. They can also provide practical help and information for tackling income shocks and financial insecurity.

Create a budget

Once debt is tackled, creating a "financial roadmap" – by setting a budget – is the best way to progress towards your goals in 2025, said Forbes.

Making a budget "will take a little effort" but it "gives you control over your finances", said the government-backed money-and-pensions advice service MoneyHelper. It will provide a "quick snapshot" of income and expenditure, so you know when you can spend and when you need to rein it in.

To "avoid going into the red", work out how much you usually spend every month on items such as household bills, rent, food, travel and leisure. This can be done through any of the free budgeting apps, or on a simple spreadsheet.

Whatever your goals in 2025, a budget is a key to prioritise your spending, whether that's on a "big purchase, paying off debt, or investing in your future", said Forbes.

Start a rainy-day fund

"What will you do if you encounter an unexpected expense or loss of income?", said financial-services company Truist. Such an event could derail your financial plans for 2025, so having a "financial safety net" could "do wonders for your peace of mind".

Unexpected expenses such as "a broken washing machine or boiler" may crop up at some point in 2025, so having access to extra funds is a good idea, added MoneyHelper.

Building up an emergency fund can take some time but the aim should be to have "at least three months' essential outgoings" available in a rainy-day account.

"Every little bit helps", said Truist, and you can make it easier by "paying yourself first" and setting up a direct deposit or automatic transfer to your emergency fund once a month.

Check your subscriptions

As January comes around, health-focused New Year resolutions, like going to the gym, are likely to figure large. If this is a personal goal for you, "keep an eye out now for any zero joining fees or cut-price subscriptions that may be better than the one you're already on", said The Independent.

You may also have other subscriptions you are no longer using, but are still paying for. "Ditch" the subscriptions that are "little used" by going back through your bank statements: this will help identify payments "you could get rid of or renegotiate".

Consider investing

"Saving alone won't make you rich", said Forbes. So, for those who are looking to boost their wealth significantly, investing could be the way to go.

Perhaps the most "powerful tool for wealth creation" is compound interest, where investors earn returns on their original investment and its "accumulated returns", meaning their money snowballs over time. Of course, it should be remembered that investment involves risk, and investors may get back less than they put in.

Investing does not only have to be for the here and now. People "often underestimate" what they need for retirement, so taking steps to "boost your pension" is important, said The Times Money Mentor.

A good "rule of thumb" is to pay into your pension each month the percentage of your salary, pre-tax, that is "whatever age you are now, divided by two".

When saving into a pension, you should "try to balance your needs today with your future needs", said MoneyHelper. Workplace pensions can help, as "your employer will usually contribute too", but even a private pension provides "one of the most tax-efficient ways to save". With basic-rate taxpayers "automatically" receiving 20% relief from the government, many will consider this a sensible way to plan for the future.