6 New Year’s resolutions to boost your financial fitness in 2025
From building a financial buffer to maximising savings interest, there are some simple steps you can take to better manage your money
The ‘fresh start effect’ refers to our tendency to want to take action towards achieving a goal in line with a special occasion or key date – like a new year. So as we enter January, now is the ideal time to decide what you want to take action on with your finances in 2025.
Here are six resolutions that can help you become financially fit in 2025.
1. Set financial goals
New Year’s resolutions are good for targeting areas of your life such as health (get fit, lose weight) and wealth (save money, spend less). But you can’t just set it and forget it. You have to get specific and take action.
To do this, pin down what your goal is, why it matters and how you’re going to achieve it. For example, instead of ‘save money’, decide how much you’d like to save in 2025. Ask yourself why you’d like to save this amount. Knowing why you’re doing what you’re doing can help keep you on track when your energy, willpower and motivation is low and your goal seems far away.
Break down how you’ll achieve your goal. Will you divide your annual savings goal by 12 and save the same amount every month? Or are there times of the year where you can contribute more? For example, if you get paid a bonus at work.
2. Where are you now?
New Year’s money resolutions don’t exist in a vacuum. To make an informed plan for where you want your money to go in 2025, get clear on where your money goes now.
Go through your bank and credit card statements for the past month or so and make a note of everything you spend money on. List your fixed/essential spending. This will include payments like your mortgage or rent, as well as household bills such as gas, electricity and water, groceries and petrol. Then list your discretionary/lifestyle spending such as meals out, socialising, entertainment, clothing and so on.
Estimates are fine where you don’t have an exact amount. Review three or four months’ worth of statements to come up with a monthly average for fluctuating expenses like groceries, petrol and clothing, for example. Armed with this information, you can now make an informed budget.
A budget is simply a spending plan. It helps you take control of where your money is going instead of feeling like it does a disappearing act. A budget is your estimate of money in minus money out for a set period of time.
If, like many people, you work on a monthly income and outgoings cycle, deduct your monthly outgoings from your monthly income. How much money do you have left? If there’s enough coming in to cover what’s going out, great. If not, you can adjust accordingly.
3. Build a financial buffer
Think of your savings as a financial buffer; your first line of defence against financial stress.
The nation’s biggest savings goals are to build a rainy day fund to cover unexpected costs, followed by saving for holidays and later life, but some 14 million people in the UK have less than £100 in savings, according to the Building Societies Association, causing worry, anxiety, shame and guilt.
Having savings of even £100 or less leads to positive feelings of optimism, pride and a sense of achievement. Start small and repeat the action to build a savings habit.
If you’re starting from scratch, aim for your first £100, then your first £1,000, in savings. Then, if you’re employed, having three months’ outgoings saved up is an ideal financial buffer, rising to six months’ if you’re self-employed.
4. Maximise savings interest
Make 2025 the year you shop around and maximise the interest on your savings.
Despite the significant rise in interest rates over the last two years, more than one in four adults still hold most of their savings in a current account paying no interest, according to the Building Societies Association. A third of all savers never compare the rate on their savings accounts, potentially missing out on over £800 extra income a year.
Savers aged 65 and over are sacrificing the most interest. With average savings of around £25,000, they’re missing out on around £1,200 in annual savings interest.
Andrew Gall, head of Savings and Economics at the Building Societies Association, said: “It’s sad to see that so many people who have successfully managed to build a savings pot are missing out on several hundred pounds of interest a year.
“This additional money could make a big difference to how people enjoy their savings, providing them with greater financial resilience and helping them to reach their goals sooner.”
5. Track lost pensions
People switching jobs more often has led to an increasing number of unclaimed pension pots.
The average size of a lost pension pot is £9,470, according to the Pensions Policy Institute, and this sum rises to £13,620 for the 55-75 age group.
To track your lost pensions, make a list of everywhere you’ve worked – an old CV will help. Then see if you’ve got any payslips or pension documents relating to these companies, detailing your pension plan number or contributions made.
If you don’t have any paperwork, contact your old employers to find out if you ever paid into a workplace pension with them. If you don’t know how to contact your employer or pension provider, the Pension Tracing Service can help.
6. Know when (and how) to seek financial help
Whatever your income, if you’re struggling to cover your basic monthly outgoings including mortgage or rent, household bills, and minimum credit card or loan repayments, that’s a sign to seek help.
Richard Lane, chief client officer at StepChange Debt Charity, said: "If you are worried about debt, now or in January and beyond, it’s never too soon to reach out for help.”
Free debt advice and support is available from charities like StepChange. The financial guidance website MoneyHelper has a debt advice locator for free services.
When investing, your capital is at risk and you may get back less than invested. Past performance doesn’t guarantee future results.