As the end of 2024 comes near, it would be the ideal time to take stock of one’s finances and make adjustments that help ensure financial security. Setting financial resolutions would especially be a good idea, in order to reach personal goals, and stay motivated throughout the year. According to Kavan Choksi, financial resolutions created and followed by a person would largely rely on their financial standing, age, priorities in life and more.
Kavan Choksi Marks Certain Financial Resolutions People Should Make For 2025
When a year comes to an end, it is prudent that people take a look back and see how the economic landscape might have impacted their lives. It would be the perfect time to reflect on the past year, refocus, and get a fresh financial start. Here are a few financial resolutions one should consider making for 2025:
- Build an emergency fund: keeping money aside can help create a financial safety net, which would be useful in case one encounters a loss of income or any unexpected expense. One should try to create short-term savings goals and practice saving money every month or week. These funds can be put in a separate savings account. For a more long-term goal, one should try to have at least three months’ worth of living expenses saved in their emergency account.
- Create a budget based on priorities: It is common for people to change their saving or spending habits over the span of a year. At the end of the year, they should take a look at their spending and identify where most of the money is going. These insights can be used to create a spending plan that reflects one’s values and priorities. Every person has specific needs and priorities. Budgeting shall help them to stay on track to reach their individual financial goals.
- Pay down debt and raise credit score: Certain types of debt are known as “good debt” like mortgages or student loans. However, there are a few types of high-interest debt, like credit card bills, that one must try to pay off as fast as possible. Reducing outstanding balances is among the fastest ways to improve credit scores. In case one is managing multiple debts, then they should also try to find an effective approach for paying them down, like the avalanche method or the snowball method.
- Save for retirement: Before the new year starts, one should check their retirement accounts and investments. In case a person is not already investing for retirement, they must research their options, like contributing to a 401(k) through the employer or opening an individual retirement account (IRA). People should try to put at least 10% of their pretax income in retirement savings, or more, if they can afford it.
As per Kavan Choksi, the end of the year would also be the perfect time for people to review and rebalance their investment portfolios. This shall help make sure that their retirement accounts and investments align with their risk tolerance and goals. Diversification is key to protecting investments from market volatility.
