2025 is around the corner and it’s time to set yourself up for financial success. One of the best ways to achieve that succes, is by preparing yourself right now, to make next year your best financial year yet. Inflation may be high, and a recession might be looming (there’s never a dull moment), but that doesn’t mean you can’t move forward. The key is to focus on what’s within your control. Here are 5 budget tips for 2024 to help you start the year off right.
5 budget tips for 2025
These are the 5 tips we recommend for setting yourself up for success in 2025:
- Update and review your budget
- Declutter your expenses
- Prioritize paying off debts
- Review your financial buffer
- Create multiple income streams
Let’s dive into each of them!
1. Update and review your budget
There’s no better way to kick off the year than by reviewing and updating your budget. Life is always changing, and so are your finances.
Begin by evaluating your monthly income. Did you get a raise at work? Have you started a side hustle? Have your earnings increased as a freelancer?
Next, review your expenses. Consider any changes over the past year:
- Inflation (should you adjust your grocery budget?)
- Rent/mortgage payments
- Utilities (gas and electricity)
- Childcare costs
If you don’t update your budget regularly, the New Year is the perfect time to start.
2. Get rid of things you don’t use (declutter your expenses)
It’s easy to accumulate subscriptions and services that you don’t use. Streaming platforms are a common example. How many of us pay for Netflix, Disney+, HBO, and others? If you use them all regularly and they fit your budget, great! But most of us are likely paying for services we rarely use.
You can save hundreds, if not thousands, of dollars by cutting what you don’t use.
This applies not only to streaming platforms. Is there a gym membership you don’t use? Time to either start exercising or cancel it! Review your credit and debit card statements to spot subscriptions you may have forgotten about, and eliminate any unnecessary expenses.
3. Prioritize paying off debts
Debt can be a major obstacle on your path to financial independence. The more you spend on interest and monthly payments, the less you have left for saving and investing. Once your debts are paid off, you’ll have much more room in your budget.
If paying off debt wasn’t a priority in 2024, make it a top priority in 2025!
Little reminder though: not all debts are the same. A mortgage is one thing, but high-interest debts like credit card balances or installment loans should be paid off as quickly as possible because they tend to have much higher interest rates. Pay them off and you can start with a clean slate.
4. Review your financial buffer
It’s always a good idea to make sure you have enough money set aside for unexpected events. A financial buffer is your safety net for tough times—like job loss, illness, or unexpected expenses.
A general rule of thumb is to save three to six months’ worth of living expenses.
Need to boost your buffer? Try these two strategies:
- The 1% rule: In the first month, save 1% of your income. If that works, save 2% the next month, and so on, until you reach a comfortable monthly saving amount.
- The 50/30/20 rule: Allocate 50% of your income to fixed expenses (like rent or insurance), 30% to everyday expenses (like groceries and clothing), and 20% to savings.
You can read more about smart saving strategies here.
5. Create multiple income streams
Our final tip for 2025 is to ensure you have multiple sources of income. Setting a budget is crucial, but you can only save so much. Increasing your income—whether through a side hustle, negotiation, or passive income—can significantly improve your financial situation.
There are so many ways to earn extra income these days, through a side hustle, for example. You might think of:
These days, there are so many ways to earn extra income. For example, you could:
- Fill out surveys online
- Offer tutoring services
- Sell e-books
- Try print-on-demand products
- And more…
Read ’11 side hustle ideas you can pick up from home’ here!
Don’t have time for a side hustle but want to increase your earnings? Negotiating your salary is always a good idea. You can find useful tips for salary negotiation here.
Another option is to invest in dividend stocks that can provide passive income every month. Learn more about dividend investing here.
