Looking to make the most of your finances in the new year? Some may think taking financial risks or chasing trends is key to maximizing potential.
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But, according to financial advisor at 4 Generations Wealth Management, Michael Fiammetta, the best thing one can do next year is the same thing he or she can and should be doing every year: master the basics.
Here are 10 awesome things you can do for your finances in 2025 and every subsequent year thereafter.
Earning passive income doesn’t need to be difficult. You can start this week.
Contributing as much as you can as early as you can to your 401(k) or IRA — within annual limits — “is one of the smartest moves you can make for your future self,” according to Fiammetta.
This is because nothing helps grow your retirement savings over time like compound interest. Can’t afford to contribute the maximum amount? That’s okay. Fiammetta argued that boosting contributions by a mere 1% in 2025 will impact your financial future.
Learn More: 4 Secrets of the Truly Wealthy, According to Dave Ramsey
If your investments are concentrated in one sector or asset class, consider diversifying stat.
“A diversified portfolio–spanning stocks, bonds, real estate, and more — reduces risk and positions you for long-term success,” said Fiammetta. This way, if one or two investments don’t perform well, others can balance out the loss.
No one likes to think about it. But what would happen to your money if you meet your untimely demise? In the absence of an estate plan, the state would determine who gets your assets based on unique intestacy laws that establish priority order beginning with closest living relatives.
But what if you wish to dictate particular amounts to specific individuals, or you prefer to pass assets to extended family and charitable organizations? Make sure a trust or will is put in place. Having a say in how your money is divided up ensures your preferences are honored and your legacy is carried on. It could also help loved ones avoid probate.
Don’t assume that just because you put an estate plan in place years ago, your job is done. Life circumstances change. As do state and federal laws.
“Life changes like marriage, children, or even retirement mean it’s worth reviewing this annually,” said Fiammetta. This will ensure your money goes to the right people.
Unforeseen events like job losses, medical emergencies, and car accidents can happen anytime, so safeguarding yourself right now is crucial. Always maintain a safety net that can cover three to six months’ worth of expenses to avoid putting large expenses on credit cards and suffering a mountain of debt.
Fiammetta advised keeping these funds in a high-yield savings account to optimize earnings.
High interest rates significantly increase the overall amount you are stuck paying back, which is why it’s essential to do yourself a favor and eliminate high-interest debt as soon as possible.
Not only will this enhance your credit score, but each payment you make gets you closer to financial freedom, letting you focus on building wealth instead of paying interest, stated Fiammetta.
This is the money equivalent of a New Year’s resolution. “Whether it’s saving for a home, funding a dream vacation, or preparing for retirement, actionable goals keep you on track,” explained Fiammetta.
Taking a specific inventory of what you want to accomplish will help create your personalized roadmap for financial success.
Why give the government money you could put into savings or use to fix up your home?
“Working smarter with your taxes can make a big difference,” said Fiammetta. Yet, many fail to do so. “Maximize deductions, contribute to HSAs, or consider a Roth conversion. A good tax strategy ensures you keep more of what you earn while staying compliant.”
Long-term care is very expensive which is why purchasing insurance at a younger age can mean locking in a good rate, thereby paying lower monthly premiums for life. Not only will this help you build a better foundation for financial stability, it can protect your family’s peace of mind.
Most people don’t know what they don’t know. Understanding how money works not only empowers you to make better financial decisions but opens your eyes to a wide variety of money-making strategies and money-wasting pitfalls. It also helps you create and achieve financial goals.
Whether through books, podcasts, or online courses, investing in yourself is often the smartest investment you can make. Let 2025 be the year you choose you.
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This article originally appeared on GOBankingRates.com: I’m A Financial Advisor: 10 Most Awesome Things You Can Do for Your Finances in 2025
