Top 5 Financial Resolutions to Kickstart Your 2025

For many families, last year was full of changes—perhaps with your finances, your goals, or maybe your attitude about money. After a couple of years of upheaval, the New Year holds the promise of better days. That makes this the opportune time to recalibrate and ensure your finances align with your goals and expectations. Use this ’resolutions’ checklist to guide your financial actions throughout the year.

Make sure you have adequate emergency fund savings.

• One thing that changed for many people is the balance of their emergency savings. Your first priority is to ensure you have three to six months of liquid savings on hand to cover emergency expenses, such as car or appliance repairs, extra medical bills, or unexpected life events.
• Also, your short-term goals may have changed. If you’re planning on buying a new car or taking a vacation, it would be essential to have cash instead of relying on debt.

Review your insurance coverages.

• The first place to start is with your homeowner’s insurance. Are your replacement limits keeping pace with housing prices? Also, check your liability coverage on both your homeowners and auto insurance. If you already have the maximum liability coverage, you may want to consider a personal liability umbrella policy (very inexpensive).
• You should also review your life insurance policy every year. Have your family protection needs increased (i.e., a new addition to the family)? Are your beneficiary designations up to date? Is it time to consider converting some of your temporary term insurance to permanent coverage?
• If you have disability coverage, is the benefit amount keeping pace with your income?
• If you are approaching your fifties, should you consider purchasing some long-term insurance? It’s not going to get any less expensive, and it could be critical in protecting your assets if you or your partner required nursing home care. At least discuss it with your advisor. 

Get your estate plan in order.

• With estate planning, you can never set it and forget it. Any life change—childbirth, a change in marital status, a home purchase—should prompt a review of your legal documents. That would include updating your will and living trust and ensuring your power of attorney and medical directive is up to date.
• It would also be important to check that your beneficiary designations on your life insurance and retirement accounts align with your will or living trust.

Review your retirement savings.

• There have been significant changes in the stock market. Are your retirement accounts holdings still positioned the way you want them, or do they require rebalancing to get them aligned with your target allocation?
• Have your retirement goals changed? Do you now plan on delaying retirement or hoping to retire early? Review your time horizon. Are you one year closer to your retirement goal? Check to see that your portfolio is positioned to achieve the returns necessary to meet your goals.
• Did you get a salary increase? Talk to your employer about bumping up your contributions. You at least want to ensure you are receiving the full matching contribution from your employer. Contribution limits for 2024 have increased to $20,500. If you’re over the age of 50, you can add a catch-up contribution of $6,500 for a total contribution of $27,000.
• Have you accumulated a sizable amount of funds in your IRA? You may want to consider converting a portion of it to a Roth IRA to take advantage of its tax-free income in retirement. Check with your advisor to see if this might make sense for you.

Check to see that your investment allocation is aligned with your objective and risk profile.

• After an up year in the stock market, you may need to rebalance your asset allocation to ensure it is still aligned with your objectives and risk profile. It’s possible your stock allocation now exceeds your risk profile and may require shifting a portion to reduce risk in your portfolio.
• If you have to sell some stocks to accomplish this, look for capital losses in your portfolio that can be used to offset those gains for tax purposes.

The good news is that you don’t have to accomplish all this at once. Schedule these actions over several months and check them off as they are completed. It might be a good idea to share this checklist with your financial advisor to keep you on track. Not only will they be useful in helping you with many of these action items, but they can also help to hold you accountable for getting them done.