If one of your New Year’s resolutions is to take control of your spending and you’ve managed to stick with it well into the winter, you’re already on the right track. This guide will help you transition from financial stress to smart strategy, putting you on the path to achieving your money goals.

Budget. 

Living “within your means” implies not allowing credit cards to blur the gap between your income and expenses. I have occasionally directed clients to cash their paycheck, pension or Social Security checks and divvy it up into envelopes labeled with their monthly fixed expenses. Try this for a few months and see how it helps you connect the dots between what’s coming in and what’s going out. 

Here’s a tip: One envelope should be a contribution towards bills that recur less than once a month, such as property tax and insurance. 

Pay off debt. 

Can you imagine initiating retirement with a clean slate? Paying off debt is a great way to start retirement. Whether or not you begin with the envelope system, make “debt retirement” one of your monthly budget items. You can continue to nurture a savings habit regardless of your retirement status—whether you’re already retired or still actively working. Creating a savings habit is equally important in both scenarios.

Save for emergencies. 

Make sure you have an emergency fund to cover several months of expenses in case your income is delayed or halted. Recent research out of University of Colorado Boulder shows that an emergency fund of just $2,500 can mean “muddling through versus falling off a cliff.”

If you don’t have such a fund, direct your bank to move regular amounts to your savings account each month until it’s at least $2,500. This small safety net can protect you from borrowing on your credit cards at an exorbitant rate; therefore, it should come before paying off credit card debt.

Invest

Upon retiring, it’s tempting for some to put everything in cash and bonds. However, most of us can’t afford this over the long term. Inflation often eats away more than fixed income returns, making it essential to consider maintaining or increasing purchasing power through stocks and diverse investments. Crafting a well-balanced asset allocation requires a discerning evaluation of your goals and risk tolerance.

Increase your income. 

If you and your partner have very different goals and tolerances, you’ll have to find a way to compromise. 

For instance, design your budget so that your basic expenses are more than covered by your fixed income (from basic salary, Social Security or pensions). Income above this amount can be allotted towards variable expenses, goals and desirables. 

If your budget is teetering on the edge of affordability, keep up or develop marketable skills. No matter how small a community you live in, you can take online courses. Many career-oriented courses are free.

Try classes through Stanford University (online.stanford.edu/free-courses) or Coursera.org

Manage your personal risk. 

Just because you retire doesn’t mean you’re immune to risk. Mitigate personal risk through prudent actions and consider insurance for unforeseeable catastrophes. Maximize the value of your Social Security by staying in the workforce until you accumulate 35 years of work history, and if feasible, delay collecting benefits until age 70. Waiting allows your benefit to increase, coupled with any declared cost of living increases, from your full retirement age (FRA) to age 70. 

Get your affairs in order. 

As we age, the likelihood of accidents or health issues interfering with our ability to conclude our affairs increases. You can proactively address this reality by creating a comprehensive will and estate plan. Take the time to connect with individuals with whom you have unfinished business. 

Cultivate a life network. 

Choose healthy relationships with people who support your best financial self. Dare to seek help when you feel overwhelmed. Signs that you may need a financial partner include:

• Paying only the minimum on your credit card or using one credit card to pay off another
• Shrinking cash accounts
• Piles of overdue bills

If these are happening to you, a fee-only planner can keep you from making big mistakes.

Alternatively, check out these sources:

• National Foundation for Credit Counseling 
• Financial Counseling Association of America 
• Financial Planning Association 
• “You and Your Money,” a personal finance book by Stanford professor emeritus Henry E. Riggs
• Budgeting software like Quicken Simplifi and Intuit Mint 

Regardless of your current circumstances, celebrate your achievements by taking the first step to turn things around. Make 2025 the year of positive financial change.