Now is an ideal time to do a financial reset, advisor says. Here’s why

More than half of U.S. consumers planned to make a financial resolution for 2025, according to a December poll by Discover Personal Loans. 

Even if you didn’t ring in the new year with some money goals in mind, it’s not too late to set some, experts say. In fact, now is a great time to get started.

“The ideal time for financial reset is usually at the beginning of the year,” said financial advisor Jordan Awoye, managing partner of Awoye Capital in New York City. “You’re able to start from scratch, see what you’ve done the year prior, and just have a clean slate.”

It helps that the 2025 tax filing season will begin on Jan. 27. You can consider your priorities and goals for the year ahead as you review your finances from last year, Awoye said.

Saving and earning more, spending less, improving credit scores, building an emergency fund, and paying off or consolidating debt are among the top resolutions, according to Discover. However, almost all respondents said they anticipate at least one challenge — inflation, the state of the economy, unexpected or current expenses — may prevent them from achieving those goals. 

Morning Consult, on behalf of Discover, polled 2,201 adults in early November.

Don’t allow the state of the economy — which you cannot control — or regret over past money mistakes to prevent you from moving forward. 

“If you’re feeling down on yourself and don’t have that right positive mindset, you might just continue down that downward spiral,” said Corbin Blackwell, a New York City-based certified financial planner with Betterment. “There is no amount too small to just get started. Maybe that’s saving. Maybe that’s paying down debt little by little.”  

Make sure your asset allocation is appropriate for your time frame, said Natalie Taylor, a CFP and founder of The Goodland Group in Santa Barbara, California. Understand market volatility and how it may impact your goals.

Some resolutions, like ensuring you have a fully-funded emergency savings account, are examples of what Taylor calls “base hit” goals. Saving might be the right strategy for these goals, which may be short-term or focus on preserving cash assets.

“You typically don’t want to use more aggressive strategies to achieve those from an investment standpoint,” she said. For cash-based goals, “we’d look at a more standard, diversified portfolio using high-yield savings or [certificates of deposit].”

Other resolutions like fully funding your child’s college education, buying a second home or retiring early may be considered “home run” goals and warrant investing in a diversified stock portfolio and possibly more aggressive strategies, Taylor said. 

The key is to focus on your goals for the year ahead and then plan the steps to achieve them.  

1. Build a better budget. Track your monthly spending and how much you save from your take-home pay. Awoye said to ask yourself, “Do you have more money coming in than going out? And if you do not, how do you fix that? What expenses can you drop? What other streams of revenue can you create that work a little bit parallel with the streams of revenue that you have now?” While you must pay for everyday expenses and recurring household bills, you should also aim to stash money away in an emergency savings account. Experts advise setting a goal to save three to six months’ worth of expenses so that you don’t have to tap your credit card for an unplanned expense.
2. Pay down high-interest debt, if you have any, and build savings. Yes, you can do both at the same time. However, some advisors say the interest rate you’re paying on the debt or earning on your savings can help determine which goal deserves more immediate attention. ”Paying off the high-interest debt is pretty much the highest priority,” Blackwell said. “If you have credit card debt, which is probably costing you about 20%, double-digit interest at least, your dollars are probably best served paying that down.” 
3. Focus on longer-term savings and investing. This is typically money you won’t need for at least 10 years. To invest your retirement savings, you might contribute to an individual retirement account (IRA) and/or 401(k) or workplace retirement plan. Put any extra money to invest in a taxable brokerage account to help turbo-charge your savings. Your time frame can help determine how you invest and what investments you choose.

Completing your financial reset is important, so you’ve set the stage for achieving your goals.

“Ultimately, where you’re going to find financial success is going to depend on what you define as successful,” Blackwell said.