Getting Financially Fit for the New Year 

As we step into 2025, the New Year offers a fresh start—a perfect time to reflect on our goals and evaluate our financial health. Whether you’re looking to break some bad financial habits or set new, better ones, now is the time to make your financial resolutions. Below are some key resolutions to consider for a financially fit 2025: 

Budget and Plan 

Establishing a solid financial plan should be your first step toward long-term financial health. Taking stock of your income, expenses, debts and investments provides a clearer picture of your financial situation. This process allows you to identify areas where you can cut back and allocate more toward your goals. 

Start by listing and organizing your debts to get a true sense of your liabilities. From there, set a realistic monthly payment plan. Once you understand your monthly inflows and outflows, creating a budget becomes much easier. It helps you stay on track and prioritize spending where it matters most. A financial advisor can help guide you through creating a comprehensive budget as part of your overall financial strategy. 

When setting goals, think about achievable milestones. Whether it’s saving for a dream vacation, a home down payment or your child’s education, breaking down your goals into smaller, manageable steps will keep you motivated. Track your spending too—small changes, like reducing dining-out expenses or canceling unused subscriptions, can add up over the year. 

If saving feels challenging, consider automating your savings by having a portion of your paycheck directly deposited into a separate savings account. Out of sight, out of mind—this simple trick can help you stick to your goals without temptation. 

Review Your Retirement Savings 

It’s always wise to review your retirement savings, especially with recent updates from the IRS. For 2025, the 401(k) contribution limit has increased to $23,500 for employees participating in 401(k) and 403(b) plans (up from $23,000 in 2024)¹. If you’ve been contributing the maximum in previous years, you’ll want to review your contribution levels and adjust accordingly to take full advantage of the higher limit. 

Additionally, if you’ve switched jobs recently or have retirement accounts from past employers, it might be time to consolidate those accounts. You can transfer them to your current employer’s 401(k) plan or roll them over into an Individual Retirement Account (IRA) for better management. 

Analyze Your Insurance 

Life circumstances change, and so should your insurance coverage. If you’ve received a promotion or your home has appreciated in value, you might have more assets and liabilities to protect. Life insurance is essential to safeguard your family’s future if something unexpected happens. 

When assessing your insurance needs, consider working with your financial advisor to secure the appropriate level of coverage—whether it’s life, long-term care, auto or home insurance. You want to make sure you’re properly insured, but not over-insured. It’s also a good time to check your deductibles to ensure they’re in line with your current situation. 

Establish a 529 College Savings Plan 

Education costs are climbing every year, and saving for your child’s education early can relieve financial stress down the road. A 529 College Savings Plan is a tax-advantaged account designed to help you save for future education costs. In addition to tuition, these funds can be used for a variety of educational expenses, including private K-12 schooling. 

A 529 plan is exempt from federal taxes, making it a smart option for families looking to set aside funds for their children’s future. Starting early allows the power of compounding to work in your favor, potentially easing the burden of tuition costs as they rise over the years. 

Don’t Stress the Number on the Scale! 

When it comes to your financial goals, be mindful of setting realistic expectations. While it’s important to aim high, it’s equally important to track progress along the way. Break down larger goals into smaller steps and celebrate small victories. Keeping a checklist of your financial goals can keep you focused and motivated throughout the year. 

Remember to review your goals periodically with your financial advisor to ensure you’re staying on track. If you need help staying on course, reach out to us—we’re here to guide you every step of the way. 

Take Action Today 

Starting the year with a solid financial foundation doesn’t have to be overwhelming. By focusing on key areas like budgeting, retirement planning, insurance and education savings, you can take control of your financial future.  

At Davie Kaplan, our integrated approach combines both tax and wealth management strategies to comprehensively assess your financial picture. By developing personalized solutions, we help ensure that every aspect of your financial life aligns with your long-term goals. If you’re ready to take the next step toward getting financially fit, reach out to us today. We’re here to help you create a plan that works for your future. 

¹ irs.gov  

Before investing in a state-specific 529 plan, you should compare your own state’s qualified tuition program and any state tax or other advantages it may provide. Units of the 529 plan investment options are municipal securities and may be subject to market value fluctuation.

Withdrawals must be used for qualified educational expenses and such withdrawals may be subject to income taxes, depending upon the participant’s state of residence.