New Year's often brings a mix of celebration and financial reflection. As Americans wake up with bleary eyes after a month of holiday spending, it's time to focus on some crucial financial resolutions. In this article, we'll explore five key financial New Year's resolutions for 2025 and provide tips on how to make them stick.

Transform Your Finances in the New Year with These Resolutions

Make a Budget

The staggering $1.3 trillion in credit card debt by the end of 2024 clearly shows the need for better budgeting. You can maintain a budget using a spreadsheet, mapping out a monthly spending plan. Budgeting apps are also handy; Motley Fool's Brokamp recommends Budgets Are Sexy, YNAB, and Goodbudget. Many big banks offer such apps and can even alert you when you're about to go over budget. A common budgeting goal is the 50-30-20 rule: allocate half of your income to needs, 20% to savings, and 30% to wants.

Save for Emergencies

Savings accounts come in various forms. Retirement savings is a long-term goal, while education savings is crucial during parenting years. However, many financial experts consider emergency savings the most important. It acts as a safety net in case of unexpected expenses like a new roof, car, or job loss. Aim to save enough to cover three to six months of expenses, as suggested by Edward Jones' Schelkopf. A recent Investopedia analysis found that the typical U.S. household should have at least $33,000 in emergency savings, which is a significant amount. Over a quarter of American households have no emergency savings account, so it's time to start one.

Earn 5% on Your Savings

Not long ago, finding savings accounts with a 5% guaranteed annual interest was challenging. But with elevated interest rates and higher inflation in the past couple of years, the savings landscape has changed. Online banks, which operate without physical branches, now offer an average interest rate of about 3.9% on savings accounts. It's not difficult to find a yield of 5% or better.

Repay 25% of Your Credit Card Debt

Credit card debt is on the rise, with the average household debt standing at around $10,870. Paying it off can be tougher than it seems. For example, if you owe $10,000 at a 20% interest rate and want to pay it off by the end of 2025, you'd need to make monthly payments of $926. As a more achievable goal, try to pay off one-quarter of your balance in 2025. For a household with around $10,000 in debt, that's about $225 in monthly payments. Fortunately, the credit card industry offers zero-interest credit cards with a promotional period of 15 to 21 months. Switching to such a card can be a big help, as Brokamp mentioned.

Make a Retirement Plan

Many of us neglect to plan for retirement. In the 2024 Retirement Confidence Survey by the Employee Benefit Research Institute, only half of workers estimated their retirement income needs. Working with a retirement planner is an easy way to plan. At the very least, find an online retirement calculator on your retirement or brokerage account website. Just assess your current situation and determine if you're on track to retire when you want.