7 Smart Money Moves for 2025
Q: It’s hard to believe 2025 is almost here, and while our family has a lot to be thankful for, we’re frustrated that after being in the workforce for over 20 years we don’t have a lot to show for it. Sure, we have a couple of teenagers who seem to cost us more money each year, but lots of other people we know do too. Based on the houses they live in and the cars they drive, they seem to be miles ahead of us financially. The only smart money move we made was buying a townhouse a few years ago after we received an inheritance from my mother’s estate. Without this money, which we used as our down payment, we would still be renting. What steps should we take this year to get our finances in better shape and get further ahead? ~ Alexis
A: My mom used to tell me to “never judge a book by its cover” because looks are deceiving. The same is true with people – unless your friends and others you know have shared their financial circumstances with you, it’s difficult to determine if they are really doing better than you or just look like they are better off. The best advice I can give you is to focus on your own financial situation, not theirs, and the steps you can take to improve your overall financial well-being.
The same is true about reflecting on your past; you can’t change it but you can learn from it and use this knowledge to improve your overall financial situation. Let’s start 2025 by focusing on the positives; you were smart with your inheritance and put that money to good use. Now three years later you’ve built up a tidy sum of equity in your home; way to go!
Prior to giving you some steps to work on this year, the last piece of advice I want to share with you is that we aren’t born with the knowledge, skills and confidence to make sound financial decisions. We have to learn and practice these skills until they become second nature to us. Accept the fact that along the path of learning you’ll stumble and make some mistakes. This is all part of the process. When this happens don’t give up or get frustrated, learn from it and if necessary get some professional help to get you back on track.
Without knowing your overall financial situation I can’t provide you with a specific plan of action but I can share with you my top tips to improve your overall finances going forward.
1. Get your budget into healthy shape
To get your budget into healthy shape you’ll need to track your expenses to find out where your money is really going and to determine if you are living within your means or beyond it. You’ll also need to factor in monthly allocations for seasonal/annual expenses as well as the minimum payments required on any outstanding debt that you have.
Once this is done you’ll need to make some decisions about where to trim back to free up some cash in your budget to accomplish specific financial goals you want to work on. It’s generally better to operate with two different banking accounts, one for monthly expenses and the other for savings for annual/seasonal expenses, emergencies and financial goals.
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2. Be value conscious
What we spend our money on is either helping us or impeding our progress financially. Your 2025 challenge is to review all of your expenses and determine if you are getting good value for the money you spend. Often it’s a question of needs versus wants. For instance, this might be the year to dial back your subscriptions. If you’re now paying a lot to access your phone’s photos on the cloud each month or subscribe to multiple steaming services and downsize to something smaller, you could save $500 each year going forward. I encourage you to involve your teenagers in this challenge since they will feel some of the impact of the changes you make. As a family, also create some rewards for your newfound savings.
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3. Start working towards a financial plan
This is where a lot of people get stalled. You don’t have to spend months gathering every bit of information and mapping out a complex plan. Your financial plan and goals will continue to evolve and become clearer over time. What’s important is to start; it can be as simple as setting a goal this year to open up a savings account and setting up monthly deposits into this account to cover off the costs of car maintenance and insurance or to save money for the 2025 holiday season. Keep in mind that success breeds success; it’s easier to move on to bigger goals once you have a few smaller successes behind you.
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4. Pay yourself first
As simple as this sounds, it’s one of the reasons why people fail to accomplish their financial goals. They put their bills and all of their other expenses ahead of their financial goals and then they wonder why there is little if anything left at the end of the month for savings. The best way to accomplish this is to have your bank automatically deposit the monthly allocation for your goal(s) into a separate account as soon as you get paid. Take this off the top of your paycheque and learn to live on the rest.
5. Pay down debt
For most people with non-mortgage debt like credit card debt, car loans and lines of credit, it’s not realistic to set a goal of paying this off in one year’s time or so. What is realistic is learning to live on a cash basis and set a goal of paying down a percentage of your non-mortgage debt each year. Focus on paying down and then paying off your high interest debt first while maintaining the minimum payments required on your other debts. When you come into additional funds over and above your monthly take-home pay, use some or all of these funds to pay down debt faster.
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6. Maximize employer-sponsored savings and retirement programs
If your employers have dollar or percentage matching registered retirement savings programs, you can’t afford not to max out your contributions. It’s free money and your future retired self will thank you for this. Keep in mind that by sheltering a portion of your income in an RRPS you will be able to reduce your overall taxable income so you won’t feel the full impact of the additional contributions on your take-home pay.
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7. Review your progress each month
Continue to track your expenses and monitor your budget to ensure you are living within your means, and make adjustments when changes occur in your income and expenses. Track your progress with paying down your debts and saving towards your goals. While it may seem like a bit of work initially, with practice it will become second nature and something you look forward to as you see the progress you are making each month.
The bottom line on smart money moves for the new year
It’s easy to get caught up in setting ambitious financial goals or making resolutions at the beginning of a new year. Instead of trying to accomplish too much all at once, take a long-term perspective; decide what you want to accomplish over the next five to 10 years. Use this timeline to formulate the action steps you need to take to achieve your goals, and the benchmarks to help you gauge your progress along the way. Just like the fable of the tortoise and hare, slow and steady wins the financial well-being race.
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