Annual physicals help us catch physical health issues early—but what about your financial health? Just like physicals, reviewing your money habits before the new year can save you from bigger financial problems down the line.
“The end of the year is the perfect time for a reset because you can step back, reflect on your current financial situation and start fresh with clear, achievable goals in the new year,” says Tori Dunlap, founder of Her First $100K and host of the Financial Feminist podcast. “It’s sort of like Marie Kondo-ing your money: What serves you? What sparks joy? What can you let go of?”
Understand your financial anxiety with a mental health check
If the thought of a complete financial audit overwhelms you, that’s understandable. Money isn’t just about numbers—it’s also deeply tied to emotions and experiences.
Wealth management consultant Christina Lynn, Ph.D., suggests starting with a mental health check to unpack your financial anxiety. “Unconscious money beliefs, like anxiety or guilt, often lead to avoidance of financial tasks,” Lynn explains. “Fear of change and inertia make it easier to stick with the status quo than to reassess finances and face uncertainty, even when positive change is needed.”
Financial therapist Aja Evans agrees with this sentiment. “People notoriously avoid looking at their money, and that’s a huge barrier to financial wellness,” she says. “They avoid it because they’re anxious or fearful. They don’t want to face the numbers or the lifestyle changes they might have to make.”
This avoidance can increase anxiety, Evans notes, “because you’re imagining the worst without knowing the reality.”
Lynn suggests exploring your money story to identify the financial attitudes and behaviors shaped by early experiences with money. She recommends journaling with prompts like “’What is your earliest memory of money?’ ’What stands out as your most significant memory regarding money?’ [and] ’How were financial roles shared (or not shared) between your parents?’”
“Exploring your personal history with money can offer profound insights and allow you to make more conscious financial decisions moving forward,” she adds.
Evans encourages starting with reflection. “Start by revisiting any goals you set for 2024 and evaluate where you stand,” she says. “Instead of beating yourself up, ask, ‘What were the barriers that got in the way of meeting my goals?’”
Assess your vital signs and address them with a treatment plan
With your mindset in check, it’s time to analyze your financial “vitals”: income, savings, debt and credit score. According to financial adviser Tuula Jalasjaa, “that simple analysis can help you identify any unused funds or high-interest debt that needs addressing.”
If you already have a budget, review how things went. If you don’t, start by analyzing your spending habits in the last 3–6 months. Where did your money go? Where did you want it to go?
Dunlap suggests using this information to identify spending patterns. “This can help you understand which purchases really matter to you so that in the new year, you can start spending based on what you value,” she says.
Once you have a clear view of your money flow, you’ll want to address the pressing monetary issues first. For many, this means tackling debt.
When dealing with multiple debts, Dunlap has a specific strategy. “Write down all of your debts, listing them from highest interest rates to lowest, and how much the minimum payment is on each,” she explains. “Start paying extra on the credit line with the highest interest rate. Keep paying the minimum on the rest. This process works best when you focus on one bill at a time.”
Another vital sign to check is your credit score. A study by Consumer Reports found that 44% of participants identified errors in their credit reports, and error complaints doubled between 2021 to 2023. To get ahead, pull your free annual credit reports from all three reporting agencies—Transunion, Equifax and Experian—and look for errors or improvement areas.
Automate healthy financial habits with preventive care
Monitoring these vital financial signs gives you a clear picture of your current financial health—but maintaining it requires sustainable systems.
For beginners, investing may feel daunting, but Jalasjaa offers straightforward advice. “If you have under $100,000 to invest, robo-advisers are a great choice,” she says. “They typically use ETFs, which are cost-efficient.”
Beyond investments, automation is a key component of financial wellness. Lynn recommends automating savings and bill payments to reduce decision fatigue and ensure consistency. Apps like Habitica, which gamify financial habits, can make saving and budgeting more engaging.
When reviewing your automated payments, don’t forget about subscriptions. A 2022 study by C+R Research revealed that consumers underestimated their monthly subscription spending, thinking they spent an average of $86 when the actual amount was $219.
Lynn also suggests connecting your daily financial decisions to larger goals. “Visualize long-term goals as part of daily actions by linking present-day choices to future benefits,” she says. “For example, ’Saving $100 this month will help my son graduate from college debt-free.’”
Don’t overlook emergency savings either. Lynn recommends ensuring that your fund covers 3–6 months of living expenses and adjusting as your life evolves. A new baby, a job change or even inflation can shift the amount you may need in an emergency.
2025’s financial prognosis: Interest rates and inflation
As we move into the new year, economic trends will shape how we approach our finances. Dunlap emphasizes protecting against inflation with small, manageable changes, such as increasing savings or investment contributions by 1%.
“To adjust [to inflation], focus on controlling your essential expenses and avoid lifestyle inflation as your income grows,” she says. “It’s also important to review your investments and adjust your portfolio to hedge against rising prices, such as by including inflation-protected securities.”
As interest rates begin to decline, refinancing might be on many homeowners’ minds. “Before you jump in, ask yourself, ‘Why am I doing this?’” Dunlap says. “Are you trying to save on monthly payments? Or maybe you want to tap into your home equity to pay off debt or invest. Refinancing should be about your bigger financial picture, not just because it feels like the right time.
“Are you planning to stick around for the next 5–10 years?” she adds. “If you’re thinking of selling soon, refinancing might not be worth it—those closing costs could outweigh the savings from a lower rate. You need a solid financial plan to make sure refinancing works in your favor.”
As interest rates drop, digital finance is also gaining traction. Lynn notes an emerging trend of storing emergency funds in stablecoins, which offer higher yields than traditional savings accounts.
“[Currently,] USDC in a Coinbase wallet offers an annual percentage yield [(APY)] of 4.7%, significantly outperforming savings accounts like Wells Fargo’s Way2Save, which offers only 0.01% APY,” she explains. However, she also says that adopting savings alternatives like stablecoins may be slow due to psychological barriers like the status quo bias.
Prioritise financial hygiene for long-term success
Treating your finances with the same care as your health means taking actionable steps now to secure long-term stability. As Jalasjaa says, “Make financial hygiene a priority. Take the time to evaluate your situation, set realistic goals and execute a plan. It’s like anything else in life: Consistency and focus lead to success.”
Photo courtesy fizkes/Shutterstock.com