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Start the new year with a smart new plan for your finances. In just a few steps, you can become a better personal finance manager and grow your wealth in 2025! We’ve got all the info you need to reset your finances in the new year!
Key success factor: commit time to your finances
Below we’ve listed the steps you can take this year to become financially independent. Before you begin however, you need to know that the key success factor to making it work for you is time. Give time to your finances and they will improve! Throughout the year you should:
- Make time to budget and review your budget
- Take time to think about your money decisions
- Spend time learning more about how to manage your money
Commit a set amount of time to your money, such as 30 minutes to an hour a week, and you will become better at making good financial decisions and growing your generational wealth!
Reset your finances in 7 steps:
1. Detox your finances
Start your 2025 money reset by reviewing your 2024 financial year, making a note of how your finances started the year and ended the year. Did your wealth grow or did your debt grow? Did you add to your generational wealth by saving and investing or did you use your savings and investments to fund your lifestyle?
Identify what you did right and what you did wrong and find ways to keep on doing the good stuff and avoid the bad! For example, if you invested a fixed amount each month, commit to continuing this and consider increasing your investment amount by say 5%! If you regularly got take-outs and put them on the credit card, resulting in a growing outstanding balance, commit to cut this down, and cut out take-outs paid for on credit!
You can also detox by identifying necessary spending items, such as transport to work, and unnecessary expenses such as designer sneakers. Cut out the unnecessary, and budgeting will be a lot easier!
2. Set SMART monthly and annual goals for 2025
Decide what you want for your money in 2025 and where you want your finances to be at the end of the year. These will be the goals you work towards in 2025. They can be small, such as save R200 a month in an emergency fund, and big, such as save R25,000 for a deposit on a new car.
Make sure your goals are SMART – specific, measurable, achievable, relevant and time-bound. For example, your goal to save R200 a month in an emergency fund is specific as it mentions an amount and where it is to be saved, and why. You can measure this by noting how much more is in your emergency fund, and it is time-bound as you are saving this amount each month. It is relevant because it means you can use funds on hand for emergencies rather than the credit card, personal loan or salary advance!
When you have your goals, check them against the SMART criteria and make sure you can achieve them. Set unachievable goals and you’ll quickly stop working towards them!
Top tip: monitor your progress and involve your family in your goals so they can encourage you throughout the year!
3. Rework your 2025 budget
You’ve got your goals, identified where you want to spend your money, now it is time to do or redo your budget!
Use an app, spreadsheet, notebook, piece of paper, kitchen whiteboard, whatever works for you, to draw up your budget. Make sure it is accessible and visible so you can see what you have planned! Doing your budget and filing it away will make you run the risk of forgetting it - sometimes deliberately!
List your expenses and income, include your goals as essential expenses and prepare a balanced budget where income equals expenditure. You can use the 1Life Insurance Budget calculator to help you draw up your budget.
Three budgeting tips
- Allow for increases in items whose price rises throughout the year such as electricity, transport and food
- Build in some budget fat or excess funds, so you have money for a few unexpected or unplanned items or price increases
- Build in some fun money, so you have some relaxation and entertainment to look forward to such as concert or festival tickets or a weekend away
Schedule a few minutes each week to track and monitor your budget and compare actual income and spending with estimated spending and income. If necessary, cut unnecessary costs or find ways to increase income such as starting a side hustle.
4. Get help from an expert
Experts are there to help you and have experience, qualifications and skills in their particular areas that you can use.
Financial advisers can help you identify your financial needs and goals, and how to attain these. They can also review your financial plans, including your SMART 2025 goals and budget, and give an expert opinion on how you can achieve these.
A wealth coach or counsellor can help you overcome the bad money habits you are struggling to break!
A debt counsellor can help you manage your debt and enter debt review, where your debts become affordable and you can pay your living expenses, if you are overindebted.
A tax practitioner can help you file your tax return and ensure you claim all allowable deductions.
A fiduciary expert can help you draft a valid will and estate plan.
5. Organise and declutter your financial documents
Filing! Don’t let it build up in 2025! File at least once a month and have an organised filing system, online or paper-based, for all your financial documents.
Set up files for tax, banking and budget, insurance, investments, will and estate plan, medical aid and/or insurance, and file accordingly when documents come in. You should also diarise important dates and information such as insurance policy anniversaries and tax return deadlines.
6. Take time to make big financial decisions
You should also take time to make the big financial decisions, such as which car to buy. For amounts over, say R5,000, commit to look first, list pros and cons, and decide after you have considered these. Spend a day or two considering all your options.
7. Set financial boundaries
These can help you stick to your plans, which will be challenged in 2025! For example, let your friends know you are committing to your budget this year and saving for your SMART goals, which means a limit on outings and presents! Also let your family know your plans, so you can all work towards them together and celebrate when you achieve your goal, including driving that new car you saved the deposit for!
Build your wealth in 2025
You’re at the start of 2025, so you have plenty of time to build good financial habits to help you become a better money manager and grow your wealth! With your reset plan in place and your goals set, you are ready to make the new year your best financial one yet! Best of all, in 12 months time, you’ll have more money and less financial stress. This will be a really great way to end the year!