As we step into 2025, simply copying and pasting your previous year’s budget won’t be enough to achieve your financial goals. Experts emphasize the need for a fresh approach to budgeting and planning to navigate the ever-changing financial landscape.
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Why You Need a New Plan
“Things don’t stay the same. Prices keep going up,” said Jessica Morgan, founder of CanadianBudget.ca. Entering the new year with a new financial strategy is essential. This means auditing your current expenses and creating a realistic budget that aligns with your goals.
Start by Reviewing the Past Year
Morgan recommends looking back on the previous year’s spending for insights. By analyzing your financial habits, you can identify patterns and areas for improvement. If you haven’t tracked your spending yet, start by reviewing your bank and credit card statements.
Audit Your Subscriptions
Subscriptions are a common area where costs can creep up over time. “Services that you subscribe to are probably raising their fees,” Morgan noted. Take stock of your subscriptions and cancel those you no longer use.
Janine Rogan, a CPA and CEO of the Wealth Building Academy, agrees: “We somehow end up subscribing to probably more things than we actually need.” Regularly reviewing and negotiating bills like cellphone plans, insurance, and bank fees can lead to significant savings.
Set Clear Financial Goals
Once you’ve completed your financial review, it’s time to set new goals for the year. Rogan suggests asking yourself: “What do you want to enjoy and accomplish this year, and how much money do you need to pay for that?”
For instance, if you aim to maximize your Tax-Free Savings Account (TFSA) contribution for 2025, which has a limit of $7,000, divide the total by 12 months to make it manageable.
“That’s $583 a month,” Rogan explained. Automating savings in smaller, consistent amounts can help you stay on track with goals like vacations, vehicle purchases, or holiday planning.
Prepare for Tax Time
An often-overlooked aspect of financial planning is preparing for income taxes. Rogan advises using your final paystub of the year to estimate whether you might owe taxes. Input this data into a tax calculator to avoid surprises when filing your return.
“Do this early in January so that come April 30, you’re not scrambling to pay thousands of dollars,” Rogan said. This is especially crucial for freelancers and others without automatic tax deductions.
Adopt a Flexible Approach to Budgeting
Rather than sticking to a rigid weekly budget, consider a quarter-to-quarter or annual approach. “You might have extra income one month, extra expenses the next, and sometimes those things are unexpected,” Rogan explained. Taking a year-long perspective allows for flexibility in managing cash flow.
To maintain control, set a routine for checking your budget. Whether weekly, biweekly, or monthly, find a schedule that works for you.
The Power of Financial Check-Ins
Financial check-ins with a partner or “budget buddy” can help you stay accountable. Kelley Keehn, a financial educator and founder of Money Wise Workplaces, shares her strategy: “At the end of the year, my husband and I go over all the financial goals we need to set while enjoying a glass of wine.”
Setting reminders to revisit goals throughout the year ensures they don’t fall by the wayside. Even if life gets busy, rescheduling a missed check-in keeps you on track.
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Find a Tracking Method That Works for You
Morgan emphasized the importance of tracking your finances in a way that fits your lifestyle. Whether it’s an app, spreadsheet, or pen and paper, choose a system you’ll stick with.
“It’s a pre-emptive step to make things easier throughout the year with your finances,” she said. “It’s a great time to get started.”
By auditing your expenses, setting clear goals, and adopting a flexible yet consistent approach to budgeting, you can set yourself up for financial success in 2025.
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