New Year, New Plan!

As 2024 comes to a close, it’s an excellent time to reflect on what the last year brought us. Think of some of the highlights and the lowlights over the last 12 months. Did some of the bigger events play out to our liking? Were some of the negative events avoidable? Did we reach our annual goals (both financially and otherwise)?

Grab a piece of paper and pen and journal some ideas down on how these events impacted you (both negatively and positively). For us uber nerds, break it down on a word document, or notes app. Instead of dwelling on the negatives the year might have brought, think about how it could have gone differently with a different plan in place. Some of those highlights might have exceeded expectations, what’s something we can do to introduce more of this into your life?

Once we have established what we want more and less of in 2025, let’s come up with a plan to make it happen!

Yes, it’s that time of year again! It’s time to figure out your current net worth! Checking your net worth quarterly (or even monthly) can be a great motivator for those actively paying down high interest debt, or those looking to reach a specific goal. For the Savvy Solos who don’t fall into these categories, it’s still highly recommended to go through this process once a year.

It might feel like peeling off a Band-Aid for some, for others (like myself) it can be exciting! How can you get where you want to go if you don’t know where you are? Wherever you are at on your financial journey, it’s important to take a little time and figure out this number to the best of your ability.

If you did it last year, I’m hoping that you are showing some improvement! If your net worth unexpectedly went down or stayed the same, it’s time for some tough conversations. Did you make a poor speculative investment decision? Did you take on debt that isn’t serving you the way it was intended? Was there financial loss due to unexpected catastrophe (for example, if the house flooded without flood insurance)? How, if at all, were any of these avoidable? What can be done this coming year to try to make up for this loss?

Some of us might have seen some unexpected gains in 2024. The stock market and housing market both showed some real gains this year. I wouldn’t expect the same growth in 2025, but this is a big win! Evaluate exactly what brought your net worth to unexpected heights and determine if the same methods should produce the same results moving forward. If you happened to have investments in a hot stock or (please don’t tell me) crypto, there’s no telling if these speculations will have the same growth in 2025. Create a plan around guaranteed overall growth of your net worth for this coming year.

Let’s take a look at the coming year at a macro level and define our greater priorities. We all want to be healthier and make more money but dig deeper. Maybe there’s a side hustle idea you want to try out to earn more money, or maybe you want to change to a lower fat diet to shed some pounds. How about getting more serious with that hobby of yours and join a community?

Whatever these bigger goals may be, I’m a big fan of utilizing the SMART method on planning for these goals:

• Specific
• Measurable
• Achievable
• Relevant
• Time-Bound

Let’s say we are looking to improve our financial health for 2025, and the goal is to pay off credit card debt. A poor plan would be to say, I’m going to put all freedom $ towards this debt till it’s paid off. By using the SMART method we would want to dig a little deeper:

• I’m going to allocate $1,000 of freedom $ per month towards this credit card debt.
• With a total balance currently at $5,485, these extra payments should get me out of debt in 6 months.
• I currently have $2,000 to work with after fixed costs. After establishing my savings plan, $1000 going towards the credit card debt per month is achievable.
• The overall goal being to improve my financial health, making credit card debt a priority is relevant to the bigger goal.
• I’m going to start this first payment of $1,000 on 1/31/25 and should have this debt paid off in full no later than 7/31/25.

By writing this down, it becomes more motivating to work the action steps you created for yourself. Consider taking it to the next level and sharing your goals with a family member or friend; someone who will hold you accountable.

Once we’ve evaluated our goals and current net worth, it’s time to look ahead to create the plan for the upcoming year. Check out how to save like a Savvy Solo if you haven’t already. The example used above is oversimplified to give you an idea on goal setting. It’s time to get a little more detailed and break out the good ol’ MFC!

Make sure your budget is up to date with any expenses that may have fluctuated since the last update. I’d recommend double checking the fixed costs section once per quarter or so. Let’s wipe the slate clean of anything not in the fixed costs section for now.

Make a list of all the major events coming up in 2025. Are there any weddings on the menu? How about a vacation this summer? Just a heads up, there will be yet another Christmas in 2025 🤪. If you are happy with the amount you spent this year, make sure to jot that down for next year. Estimate the cost of each event (always round up), divide by the number of months from now till the date of the event, and put that number down.

I can’t stress enough that a Roth IRA is an important tool when it comes to building wealth. The maximum contribution, in 2025, is $7,000 which would mean $583.33 per month in order to max out. HSA maximum contribution for 2025 is $4,300 making it $358.33 per month to max out. Don’t get discouraged if these numbers are too high for you right now, start off where you can at a rate that makes sense for you.

Let’s say that we have 3 weddings in 2023 where we want to gift $100 to each. The holidays cost us $300 this year and should be about the same for 2025. There’s also a trip to Mexico with some friends in October we don’t want to miss, probably looking like $2,000. Also, our emergency fund isn’t quite where we want it to be yet (6-9 months of fixed costs), and our car is currently in good shape. We’ll go ahead and use the above example of paying off credit card debt to be a primary goal for 2025.

Here’s how we might break down the 2025 Savings Plan:

• Gifts (weddings/holidays): $50
• Mexico: $200
• Vehicle Fund: $100
• Emergency Fund: $100
• Roth IRA: $300
• HSA: $200

This will total $950 going in different categories on the MFC! This will leave us with $1,050 per month as freedom $. If we allocate $1,000 of that to credit card debt (like our goal was above), we’ll still have $50 per month wiggle room to either do something fun or add to one of the savings buckets.

Don’t forget, plans might change, and savings buckets (minus the emergency savings) can be interchangeable. Also let’s keep in mind, that we are aggressively getting after that credit card debt. $50 per month of freedom $ sounds devastating, but it’s only for the next 6 months, then we’ll have over $1,000 to play with (plus a smaller fixed cost number)!!! Feel free to play around with the numbers but be intentional on what the plan is.

Instead of just mirroring the standard “To-Do” list you may have created, the “Not-Do” list would consist of habits created that aren’t to your benefit. This list should consist of activities that you partake in that aren’t actually creating value in your life, and (most importantly) are realistic. The idea here is to help prioritize your SMART Goals, and minimize time spent on low value items.

For instance, a not-do item might be to not order pizza just because it’s Friday. This doesn’t mean you should never order pizza on Fridays, it means don’t do it just because it happens to be Friday and that’s what we do. Another one might be to not hop on your phone between the hours of 9-12 on a workday. This doesn’t mean don’t answer an important call, it means don’t go mindlessly scrolling on social media when that time could be put towards work related tasks. Limiting the amount of time checking pings on your phone will lead to more efficiency.

Depending on your current budget (for both time and money), this might be the year to start doing “that thing” you always wanted to do. Maybe its climbing Mount Everest, or maybe its joining that bowling league! Maybe it’s starting a book club, or even a new company!

After filling out the MFC! you’ll be able to determine what you have room for. It’s possible one or more of these things isn’t going to be attainable in 2025, and that’s ok! Use it as motivation to propel you to make more space in the MFC! for more freedom $ in the budget moving forward.

We don’t want to build the foundation of 2025 on a house of cards. A plan without the flexibility of variables is doomed for failure. That’s not to say you shouldn’t be gung-ho about reaching your SMART Goals. Instead, we should realize that unexpected events will inevitably happen, and we should have the ability to plan around them.

Of course, a fully funded emergency fund is going to alleviate most of the variables that get thrown our way. Given the fact that America’s savings rate is currently under 5%, I’m willing to bet most of us don’t have that in place yet. Don’t freak out about getting all of your savings’ goals achieved right away, instead have some level of income designated to the emergency fund, and bucket fund, and make changes that best suit you along the way.

For the Savvy Solos who haven’t created an annual gameplan yet, this might sound pretty daunting. I’ll be the first to admit, my 2024 gameplan took a while to create and had countless changes to the action steps throughout the year. That said, I hit all my original 2024 goals and on a fast pace to reach the longer-term goals.

Try to keep SMART Goals aggressive yet achievable. In working the MFC! or budget of your choice, the hard numbers should provide you with the immediate possibilities as well as options for the future. If these options feel too limiting, it might be time to take action steps in order to improve one’s overall financial health.

Above all else, I want to wish all you Savvy Solos a happy and healthy new year! 2025 is going to be our year! I can feel it!

Stay classy Solos! ✌️