Five financial goals to achieve in 2025

At the start of every new year, gyms are packed with people looking to make good on resolutions to live healthier and feel more energized. But don’t overlook another sure-fire (and more affordable) way to boost your confidence and feel great – getting your finances in shape.

Shedding your debt can lift a huge weight off your shoulders. According to a recent survey by insolvency firm Spergel, 90% of Canadian respondents said their debt causes them to feel moderate to severe stress.[1] Whether you’re looking to improve your investment strategies for 2025, shore up your savings or pay off that credit card debt for good, the only way to hit lofty goals is to set them early and plan for them.

Prioritize debt repayment strategies.

With the average non-mortgage consumer debt reaching $21,810 for Canadians in the third quarter of 2024, debt repayment should be a top priority. Although you can pay your balances down in whatever manner you choose, you may find it easier to adopt one of a few more structured strategies, like the “avalanche” or the “snowball” approach.

The avalanche approach to debt involves reducing the total amount of interest you’re paying across all your debts, by paying down the highest interest balance first and then moving on to the balance with the next-highest rate. In contrast, the snowball approach focuses on paying off each of your balances from the smallest to the largest.

While the avalanche strategy may be the most cost-effective, the snowball may be easier to follow, simply because it offers quick wins that motivate you to keep going. Regardless of which strategy you choose, the intention is to pay off your debts as quickly as possible and avoid incurring any new debt. Our Ditching debt guide can help you create a clear plan to tackle your debt and stay on track toward financial freedom.

Strengthen emergency funds.

You’ve probably heard about the importance of having an emergency fund, but how much to keep in it and where you should keep it may have different answers, depending on who you ask. Ideally, try to save enough to cover all expenses – from your cellphone bill to your mortgage to groceries and other essentials – for three to six months.

Something to consider, however, is whether your emergency fund is gradually eroding due to inflation: rising costs can mean the money you set aside may not go as far as you expected. High inflation, as measured by the consumer price index, is not currently as significant an issue as it has been in recent years, but it’s impossible to predict when prices might jump again.

While it’s crucial to keep some of your savings as liquid as possible, so you can access them quickly when needed, you can still take some steps to prevent inflation from cutting into your emergency fund. One approach could be to direct a portion of your savings into a lower-risk investment, such as a low-volatility factor ETF, which can offer some growth to counteract inflation, and can still be easily sold if you find you need a little more cash than what’s available in your more liquid savings.

Plan to maximize your registered account contributions.

Although this goal might require some serious mapping out, maximizing your contributions to your Tax-Free Savings Account (TFSA), Registered Retirement Savings Plan (RRSP) and First Home Savings Account (FHSA), or whatever combination of these accounts you currently have, would put you far ahead of most Canadians, thanks to compound growth.

For 2025, the TFSA contribution room increased by another $7,000, bringing the total lifetime contribution room to $102,000 for those who were at least 18 years old and eligible to open an account in 2009. The FHSA contribution limit is $8,000, although up to $8,000 of unused contribution room can be carried forward, subject to the maximum $40,000 contribution limit. Please note, FHSA contribution room only begins accumulating when an FHSA account is opened. In addition, RRSP contributions are capped at 18% of the previous year’s earned income to a maximum $32,490 for 2025, unless you’re carrying a balance forward from 2024.

If you’re willing to shoot for the stars and try to hit this financial goal, consider dividing your contributions across all 12 months and setting up preauthorized contributions timed to your paycheque, to ease the burden and avoid a mad dash next year. If you’re only able to contribute to one of these accounts, speak with your advisor about which one you should prioritize.

Try out Fidelity’s retirement calculator to see just how far these regular investments can take you next year.

Stay invested and stay informed about market trends.

With the strong equity market performance overall in 2024, you don’t want to lose momentum. Contributing to your investment accounts regularly will help you maximize your returns. While it's important to stay informed about emerging trends, maintaining a long-term perspective is key to achieving your financial goals. For instance, if you’re interested in potentially reducing volatility and increasing cash flow, you might want to consider exploring Fidelity Equity Premium Yield ETF. Or if the growth of artificial intelligence fascinates you, then Fidelity Global Innovators ETF might be worth considering. These options allow you to invest in areas you care about while staying focused on the bigger picture of long-term growth.

And don’t overlook the value of maintaining a diversified portfolio, especially during periods of higher geopolitical uncertainty. You can learn more about Fidelity’s approach to volatile markets here.

Re-examine your financial plan based on current interest rates.

Now that interest rates have been coming down, this may be a good opportunity to take stock of your finances. For instance, if you have money sitting in a high-interest savings account, it may not be meeting your needs, and any GICs maturing in the near future will likely earn at a lower rate if you renew.

Similarly, but for the opposite reason, lower interest rates mean lower monthly payments if you can refinance your mortgage or car loan payments. As you head into 2025, speak with your advisor about how a lower-rate environment might affect your portfolio.

You may still be working on hitting 2024’s financial goals – like saving 20% of your income, or even just starting to save for retirement – but that doesn’t mean you can’t add a few additional goals. After all, every step you take to manage your finances better is a step toward financial freedom.