How to set your 2025 financial goals
Here’s the thing: today’s economic environment is quite unstable and costly. And while the rate of inflation has dropped slightly over the last few months, the costs of goods are continuing to rise — but not at the same rate as our wages. As you enter the new year, it’ll be important to keep your personal financial situation in check.
The first thing you’ll want to do is ensure that a good budget is in place for your personal finances and that you adhere to it. Often overlooked however, is the setting of financial goals — more specifically, effective structured goals — to maximize your financial success and stability in the future.
These financial goals help you make sure all your needs are met and provide you with the ability to deal with unexpected events like vehicle and /or house repairs.
Set SMART goals
When considering financial goals for 2025, you will want to ensure they are SMART goals. SMART goals, by definition, are specific, measurable, achievable, relevant, and tentative.
- Specific goals are clear, precise goals that outline what you are looking to achieve.
- Measurable goals are tangible in that there is way to measure progress.
- Achievable goals mean they are realistic to your situation (i.e. time and income).
- Relevant goals show there is a priority or a willingness to sacrifice to achieve the goal.
- Tentative goals are flexible, as life events can change your situation and make achieving the goal more challenging.
Outlining the above components for your goals will assist you in monitoring your progress and ensure you’re on the right financial path.
Understand your current situation
Prior to setting goals, ensure you have a clear picture of your financial situation. This means having a good budget in place, understanding your current income and expenses, and an understanding of your assets / property owned.
Debts are another important part of your financial situation and will have a significant impact on the goals you want to pursue in the upcoming year.
Define your goals
Once you understand your financial situation, your next step is to define your goals. These goals could be actions like setting up emergency funds, paying off debt, and purchasing a home. While determining these goals, keep the SMART goal concept in mind. Because without clear and purpose-driven financial goals, it’s easy to fall back into making impulsive financial decisions, maybe even leaving you scraping by every month living paycheque to paycheque.
Prioritize your goals
The next step, prioritizing your goals, and will help you remain focused and prepare for the future. To do this, determine what goals are the most important and / or urgent. Keep in mind, when prioritizing, your focus should be on your needs, not your wants.
Emergency goals
As we head into 2025, developing an emergency fund would be an important goal. With the uncertainty in today’s economic and political environment, it’s more important than ever to have an emergency fund in place to give you peace of mind to deal with any unexpected expenses that come about.
As most of us have experienced, unexpected expenses are almost a guarantee to occur, and when they do, you should be prepared for it. There will always be house or vehicle repairs that pop up and need fixing.
Using credit for these emergency expenses can be very costly, potentially leading you down a path of increased debt and financial difficulty. An emergency fund can help you tackle these expenses responsibly. You can start small by making a goal to set aside a specific amount per month. From there, you can think longer-term, like saving a specific amount in one year, two years, etc. Make sure the amount is reasonable to your financial situation and achievable.
Revisit your goals
Your financial goals should be reviewed often and adjusted if necessary. Financial situations change over time, whether it’s an increase in income, increase in expenses, or an unexpected emergency has popped up. Additionally, your preferences and priorities may evolve over time. If one of these things happen, then you’ll need to revise your goals to keep you on the right financial track.
Setting financial goals for the year ahead can be challenging but very rewarding. By following these steps and implementing SMART goal concepts, you can develop a realistic plan for your 2025 financial journey.
If you feel overwhelmed by your debt or have questions about creating financial goals, our experienced advisors are here to support you. Reach out to us today for a free, no-obligation consultation.