7 tips to give yourself a financial restart this new year

Personal finance tips for 2025 Personal finance expert Douglas Hoyes speaks about working to reduce your debt-to-income in 2025.

This year, why not prioritize your financial well-being?

The start of a new year is the perfect time to take control of your finances and set yourself up for success. Whether you’re recovering from holiday spending or simply looking to make smarter financial decisions, a fresh approach can help you achieve your goals.

Taking a moment to reflect on your current habits, set achievable goals and create a realistic plan can make all the difference in building financial confidence.

Below, I’ll share practical tips to help you hit the reset button and start the year with a solid financial foundation.

1. Use your current finances as a baseline

If you’re like many, you may be starting off the new year with a not-quite-so-satisfied feeling about your finances. Perhaps youwent over budget on holiday gifts, didn’t reach the savings goals you set last January, didn’t get the promotion you expected, or faced other unexpected financial setbacks.

The first thing you should do moving into 2025 is to record your current finances. Take screenshots or write down the following:

-- how much you have saved the past year;

-- how much you have earned the past year;

-- how much you have invested the past year;

-- how much debt you currently have; and

-- the current balance of your bank accounts.

This will be your baseline, and it should be your goal to maintain the good habits you’ve kept up with and improve the areas where you feel you’ve fallen short.

2. Reflect on your financial habits

Now that you’ve got a baseline to work with, take a few minutes to reflect on some of the habits (good and bad) that got you to that baseline.

What spending category did you spend the most on? How often did you invest money? Did you have to tap into your emergency savings? How much money per week did you spend on eating out or recreational activities?

Here, it can be a good idea to journal and take written notes so you can begin to formulate an action plan to make the changes you want to see.

3. Be brutally honest with yourself

While reflecting on your habits, start by writing down all of the small things that you could do differently to put yourself in a better position. Be brutally honest with yourself and realize the areas that you neglected.

At the same time, give yourself credit for the positive habits or financial steps that you may have taken through the year, even if it was something as small as improving your credit score by 20 points. What are some ways you could compound on those good habits to create great habits?

4. Set SMART goals for yourself

Using the SMART framework is a great way to make sure that your new financial goals are both actionable and achievable.

SMART stands for Specific, Measurable, Achievable, Relevant and Time-bound. For example, instead of saying, “I want to save money,” a SMART goal would be, “I will save $10,000 by Dec. 31 for a down payment.” This approach keeps your objectives clear and trackable.

Break larger goals into smaller milestones to stay motivated. For instance, saving $10,000 could mean setting aside $833 monthly or $192 weekly. SMART goals provide structure, helping you stay focused and on track throughout the year.

5. Create a realistic budget

Creating your budget starts by assessing your income and expenses to understand where your money is going. I often recommend using the simple 50/30/20 rule:

-- 50 per cent of your income for essentials like housing and groceries;

-- 30 per cent for discretionary spending; and

-- 20 per cent for savings or debt repayment.

Thankfully, modern banking and budgeting apps make this relatively simple. Many online banking apps have features that can generate reports and track the categories you’re spending in. Some apps allow you to link all of your bank and credit cards so you can track income and spending across all of your accounts.

I recommend a bi-weekly review of your budget to ensure you’re on track. If you find yourself getting off track, fine-tune your daily activities to help you get back on track to meet your end-of-month goal.

6. Be strategic about debt reduction

The median debt held by Canadians under 35 is $19,000 and increases to $35,200 for those between 35 and 44, according to the latest data from Statistics Canada.

With interest rates still high, you may be finding it difficult to keep up with monthly interest payments, let alone make a dent in your principal debt.

If you’re serious about getting out of debt, start by prioritizing your high-interest debt. Payday loans, personal loans and credit cards often come with the highest interest rates, so you should always try to overpay your monthly payments with these to bring down the principal balance and get them paid off as quickly as possible.

While you’re doing this, also make sure that you continue to make your minimum monthly payments on your lower-interest debt.

If you’re seriously overwhelmed and are finding it difficult to keep up, it may be best to look into a debt consolidation loan. This is a special type of personal loan that you can apply for designed to cover the total balance of your debt, thus consolidating everything into a single loan with a lower interest rate.

Not only will a debt consolidation loan simplify multiple payments into one monthly payment, but it can also boost your credit score, as your credit report will show multiple credit accounts paid in full.

7. Simplify investing and saving

My final tip is to simplify your investing and saving. In my experience, saving and investing is the easiest when you automate it. For example, you can change your online bank settings to automatically set 10 per cent of your paycheque aside into an investment or savings account.

If you’re doing side hustles or receive cash tips, try to set aside a percentage into an envelope or safe place for a rainy day.

8. Give your actions time to compound

Resetting your finances will take some time. Even if you give it your all and do everything right, don’t expect to see a major change by February. Realistically, your financial situation may only improve by 5 per cent each month.

This is where your patience and consistency come into play. That 5 per cent, when allowed to compound over time, can result in noticeable quarterly differences, and can make a big difference over the course of a full year.

If you find yourself getting off track or losing your motivation, come back to the notes you wrote, remind yourself of your goals, and remember the ‘why’ behind your desire to improve your financial life.