Creating Habits in 2025: The Key to Long-Term Financial Success
by Leah Woodly
As we step into 2025, many of us are setting ambitious goals for the year ahead. Whether it's saving more, planning for retirement, or simply improving our overall quality of life, these goals reflect our desire for growth and stability. However, there’s an important distinction to be made between setting goals and creating lasting habits.
Recently, Dan and I released a compelling YouTube video in which one of the topics of discussion was the power of habit creation over goal setting. Dan discussed how shifting focus from end-goals to daily habits can lead to more sustainable and impactful results. This can be true for all facets of your life like your personal wellness and especially in the realms of financial planning and retirement preparation.
In this blog post, we’ll dive into why habits matter more than goals, how to build strong financial habits in 2025, and how this shift can enhance your long-term quality of life.
Why Habits Outshine Goals
Goals are important, but they often focus on the end result. For example, you might set a goal to save $10,000 by the end of the year. While this is a clear target, it doesn’t address the daily actions required to reach it. On the other hand, creating a habit of saving $30 a day or automating a portion of your paycheck directly into a savings account builds a system that continually moves you closer to your goal.
Goals are finite; once you achieve them, there’s often a lull. Habits, however, create a foundation that sustains progress beyond any single milestone. This approach is particularly valuable when considering financial planning and retirement strategies.
Building Financial Habits for 2025
So, how can you incorporate habit-building into your financial planning for 2025? Here are some actionable tips:
1. Review Your Retirement Plan Contributions
Make sure your retirement plan contributions are aligned with your quality of life goals. Contribute at least enough to get your employer match, then make sure the remainder of your contribution, if any, is helping you to get closer to your quality of life goals. If your goal right now is a big move, you may need to consider reducing your contribution down to the match. If your goal is strictly retirement within the next few years, you may want to up the ante. The important part is that a consistent contribution is being made to your plan.
2. Automate Your Savings
One of the simplest habits to build is automating savings. By setting up automatic transfers emergency reserves, you create a system that works even when life gets busy. Start small if necessary and gradually increase the amount over time. Building your emergency reserves will help towards giving you the peace of mind and security you need if the unexpected occurs.
3. Review Finances Monthly
Rather than setting a goal to reassess finances once a year, make it a habit to review your financial plan monthly. Dedicate 30 minutes a month to review your actions to make sure they are aligned with what you’re trying to accomplish. This consistency ensures you stay on track and adjust as needed. This can also be a great opportunity to open up a line of communication between spouses about money and their life’s goals.
4. Invest Small, but Often
Waiting for the “perfect time” to invest can lead to missed opportunities. Develop the habit of investing small (or large) amounts regularly. Whether it’s $50 or $5,000, the key is consistency. This habit leverages the power of compounding, enhancing your retirement funds and your slush funds over time.
5. Practice Gratitude and Contentment
Financial habits aren't solely about numbers; mindset plays a crucial role. Form a habit of practicing gratitude for what you have. This shift may reduce impulsive spending and can foster a healthier relationship with money, contributing to a better quality of life.
Quality of Life Through Financial Habits
Financial stress can significantly impact overall well-being. By cultivating healthy financial habits, you can alleviate much of this stress, enhancing quality of life.
If you’re one who budgets, imagine forming the habit of budgeting every Sunday evening. This simple act not only keeps your finances organized but also instills confidence and peace of mind, allowing you to focus on family, hobbies, and personal growth.
Quality of life isn't just about having more money, it's about financial stability, freedom, and the ability to make choices that align with your values, priorities, motivations, and goals. Habits such as regular giving, value-based spending, and intentional saving can contribute to a balanced, fulfilling life.
Starting Small: The Key to Habit Formation
There is value in starting small. Trying to overhaul your life overnight is unrealistic. Instead, pick one or two small habits and build from there.
As an example only, if saving for retirement feels daunting, start by contributing $20 a week to a Roth IRA. If building an emergency fund is a priority, create a habit of rounding up purchases and applying the extra amount to your reserves. Small wins build momentum, reinforcing the habit loop.
The Role of Accountability
Another powerful strategy is accountability. Share your habit-forming journey with a spouse or a friend. Regular check-ins increase commitment and provide encouragement along the way.
Consider joining financial planning communities or working with a Certified Financial Planner ® (CFP®) to establish and maintain these habits. Professional guidance not only enhances results but also keeps you motivated.
2025 Is the Year of Habits
Creating habits can be key to achieving financial goals and improving your overall quality of life. By focusing on daily actions, automating positive behaviors, and maintaining consistency, you set yourself up for long-term success.
In 2025, let’s shift our mindset from goal setting to habit-building. Whether it’s for retirement planning, increasing savings, or reducing debt, the habits you form today will shape your financial future for years to come.
Ready to start building financial habits? Watch our full video on YouTube and take the first step towards a brighter, more secure future.
Disclaimer: The information provided in this blog post is for educational and informational purposes only and should not be construed as financial advice. Individual financial situations vary, and you should consult with a Certified Financial Planner® or professional advisor before making significant financial decisions.