Looking at your finances at the start of a new year may not feel as exciting as making other resolutions, like starting a workout routine, eating better, or finding ways to relax more. However, your financial health is often closely tied to your physical and mental well-being.

The good news is that improving your financial situation may be easier than it seems. Here are six easy steps to help you begin 2025 in a smart and secure way.

1. Review Your Household Budget
Start the new year by looking over your budget. Take note of your average monthly income and all of your regular and changing expenses. Then, think about your financial goals for 2025 and use that information to create a plan that works best for you. This is especially important now because inflation is still high, which means you’re probably spending more on everyday items like groceries and gas.

If you’re not sure where to begin, Morgan Stanley offers financial tools through its online platform that can help you track your spending, monitor your income, and create a budget that fits your needs.

2. Check Your Emergency Fund
It’s important to make sure you have enough money set aside for emergencies. This is especially true when the economy is showing signs of slowing down.

An emergency fund can help support you during tough times, like job loss or other unexpected life events. A common goal is to save three to six months’ worth of living expenses in an account that’s easy to access. But your needs can change, so it’s a good idea to check if your current savings still match your current lifestyle.

3. Work on Paying Down Your Debt
Even if you manage your debt well, it’s worth taking extra steps to reduce and possibly combine it. For example, if you’re expecting a raise or a year-end bonus, using that extra money to pay down high-interest debt could help you lower your balance faster.

After that, think about combining different debts into one loan with a possibly lower interest rate. This can make your finances simpler and reduce the stress that often comes with managing several loans or credit cards. It may help to speak with a financial advisor about the best way to approach this.

4. Review Your Financial Goals
Take some time to see if you’re still moving toward your goals, like saving for retirement or building your investment accounts. If recent market changes or life events have set you back, work with a financial advisor to get back on track.

If you’re still on the right path, think about what new goals you want to aim for. For example, did you increase your retirement contributions in 2024? Can you contribute more in 2025? A financial advisor can help you review the year ahead and make sure you’re making progress toward what matters most to you.

5. Reassess Your Investments
Look at how your money is divided across your investment accounts—between stocks, bonds, and cash. Your investment choices should reflect your life stage and savings goals.

If you’re getting closer to retirement, you might want to shift more of your investments into safer areas like bonds. Also, if the market has been up and down lately, your investments may be out of balance, and now could be a good time to adjust them.

Keep in mind, the closer you are to retirement, the more important it is to avoid big ups and downs in your investments.

6. Update Your Estate and Insurance Plans
The beginning of the year is also a good time to review or create an estate plan and check your insurance coverage.

• Make or update your estate plan: If you don’t already have a will, power of attorney, or health care directive, make these a priority this year. These documents help make sure your wishes are followed and your assets go where you want them to.
  
• Review your life insurance: Go over your life insurance policy to make sure it still fits your needs. If your employer doesn’t provide life insurance, you might want to look into buying your own policy. Big life events—like getting married or divorced, having children, buying a house, starting a business, or changes in income or debt—can all affect how much coverage you need. A yearly check can help make sure your loved ones are protected and that your coverage still matches your goals.