5 Keys to Financial Success in 2025

The new year is an exciting time with nothing but opportunity on the horizon. It can also be the most lucrative years thus far. When it comes to financial goals a majority of people think of a budget, tightening things up with spending, which coin or stock is going to shoot off in the stratosphere, or which investment can offer the best return.

This leads to having a sort of tunnel vision and it's easy to lose sight of the overall financial picture. When we focus on just one area this leaves the other important ones getting out of balance, or worse, neglected altogether.

These 5 key areas will help you make 2025 your most financially successful year yet. They are:

1. Net worth
2. Goal setting
3. Expense management
4. Investment planning
5. Risk reduction

Net Worth

How do you measure wealth?

There ain't no money like roofing money and to go a whole year without anything to show for it other than a collection of expensive doodads would be a shame. It's not about how much you make but how much you keep.

Net worth tells you where you stand for better or worse. It's like stepping on the scale to show you a snapshot of where you're currently at before starting a fitness program.

It's a super basic calculation: Assets - Liabilities = Net Worth.

An asset is anything that you own of value like your house, money in the bank or retirement accounts, your vehicle, etc. Liabilities are anything that you owe such as the mortgage, student loans, car loans, credit cards and the like.

When you subtract the total value of what you owe from what you own that leaves you with your net worth. It's the same as figuring out your home equity but it's your household's equity.

Again, your net worth is just a snapshot taken at a given time so you have to record it regularly over time. This will be the key to you seeing trends as it improves over the long run. Paying down debt and increasing savings and investment amounts are key factors in a positive growth.

Checking this monthly is best, quarterly is okay, and annually as a bare minimum.

Goal Setting

So now that you know where you are now you can make game plans for the future. There are so many ways to go about this but putting pencil to paper is the starting point.

Start with brain dumping everything that you want to be, do, and have for the year. It's okay to step away and come back to this list and add to it. Get it all out there.

Then, once you've gotten everything out on paper go through your list and prioritize what's the most important to you until you've decided on what's going to be worth your energy and focus.

Remember, SMART goals are best:

1. Specific: Be as detailed as possible
2. Measurable: Have a defined way to measure progress
3. Attainable: You have the will but do you have the skill
4. Relevant: Does this align with your other goals and priorities
5. Time Bound: Set a deadline

Example: I will contribute 10% of my paycheck towards paying off my Mastercard balance of $3,178 by June 1st.

Be SMART with your goals and brilliant in the basics.

Break down your goals into bite size pieces by going from monthly targets, to weekly objectives, which result in daily actions.

Expense Management

This is the meat and potatoes and the mecca of money management. Discipline can't come strictly from forced will power. Will power and motivation are temporary states that can lead us to being vulnerable to making poor choices when faced with emotionally draining times in our lives.

The secret to discipline is in having a system.

These are defined rules that you yourself have made by your own standards so it reduces the likelihood of impulse decisions that chip away at results. This is when the money is like sand falling through our fingers and we get to the end of the month not quite sure where it all went.

Get your financial infrastructure setup in the form of your core bank accounts. Have an income allocation strategy that defines what percentage of your paycheck is going to go to different areas of your life such as living needs, wants, and investments.

Combine this with a budget for the areas you truly want to get better at keeping in check such as shopping, eating out, impulse buys.

Have a method to track your expenses whether it's writing it down on paper such as a planner, updating a spreadsheet, or using software. You have to be able to categorize your expenses to track and manage areas that become unbalanced in your day to day life.

Take 5 minutes at the end of each week to go through your expenses you've recorded or made during the week and identify areas for improvement for the following week.

Going longer than a week to circle back to doing this is a recipe for not remembering what certain transactions actually were.

Investment Plan

Oh man, finally, the juicy stuff!

It's easy for a lot of folks to confuse speculation for investing and that's when the horror stories and water cooler bragging come into play. "I made $40k on trading xyz stock" or "crypto just shot up to outer space today!! Buy some and thank me later".

If you're still juggling consumer debt please, do yourself a favor, and circle back to mastering the first 3 sections before committing to an investment plan. When you get to that point you'll be a well oiled money management machine and will be shoveling money into your investments like no other.

If you are at that point already then this is when you can explore tax advantaged retirement accounts, such as a Roth IRA or an employer sponsored plan if they have one, brokerage accounts, real estate, and beyond.

The investment world is vast and diverse so it's easy to feel overwhelmed if you haven't done your research in advance.

A practical diversified approach, focused on asset allocation, has had the best track record so far. Remember, boring is best.

Maybe you need to rebalance your portfolio to keep it in line or confirm that it's performing as expected. Benchmark your investments to an appropriate index such as the overall stock market to determine whether or not it's performing as expected.

Monitoring your investments should be like watching the grass grow. If you're riding emotional highs and alternating between ecstasy one day and anxiety another then it's probably best to change your approach.

The point should be for a reasonable rate of return, with a risk level you're comfortable with, for consistent growth over time.

Risk Mitigation

This area most often gets overlooked because it seems so basic or unsexy. In reality managing risk is the primary focus of finance. "More risk more reward" seems to be the common mantra.

If that were true then we would bet it all on black and spin the wheel but that's a great way to hit rock bottom. Risk is okay when it is calculated and steps have been put in place to protect your money.

This is fine when we're talking investments but what about everything else?

Having money in the bank, aka liquidity, for a few months reserves is fundamental number one. Heck, even paying down debt helps reduce your risk.

Think of your cash reserve like a well. You never want it to run dry.

You also don't want to be forced into a position where you got to sell some of your investments to get money when you need it.

Have various forms of protection in place such as these areas:

• Home & auto
• Life
• Health
• Disability

These policies will shift your personal risk to an insurance company.

Think about everything that could go wrong that could possibly cause a financial catastrophe. Once you've thought all of these potential scenarios out then take steps to put things in place that will prevent them from happening. Have contingencies in place because complacency kills.

Putting it all together

Taking a practical and holistic approach to financial well-being will help identify gaps before they lead to setbacks. These areas are the core components of a solid financial system.

I challenge you to take the first step and review all of these areas.

Set a date at the end of the year and review everything in it's entirety even if you've been consistently managing the individual areas throughout the year. Step back and look at your big picture for what it is so you can jump back into it for the following.

Great things are coming your way and it's time to live the life you deserve!