Financial Planning: 4 Key Steps To Tidy Up Your Finances in 2025

Decluttering your finances is crucial for financial success. Getting a clear assessment of your financial situation and forming an action plan to achieve your goals is the first step of the decluttering process. Alternatively, you can also change your goals to see which of your financial needs is more or less significant.

Reviewing your finances gives you a clear idea of how much money you need for which purpose and how you will fulfil those purposes. It is generally advised that you should simplify any unnecessary complexities relating to your finances.

Here is how you can tidy up your finances in 2025:

Make a Budget and Stick To ItCalculate your expenses, factor in all the basic things that you spend your money on like, utilities, groceries, clothes etc. Once you have a clear picture of your necessary expenses you can subtract all such expenses from your income.

In the next step you can list those expenses which are frivolous in nature or other unnecessary spends. Some examples of unnecessary spending may include the money spent on buying junk food, expensive coffee etc. Once you deduct the money spent on unnecessary expenses, you can get an understanding of the money you are saving each month.

If the money you are left with after deducting both necessary and unnecessary spends is less than 10 per cent of your entire salary, you should try to reduce your unnecessary spending. Increasing your savings to more than 10 per cent of your entire salary will help you in maintaining a balance between what you need and what you want to have while giving you the opportunity to save your money.

Review Your Insurance Policy

Reviewing your insurance policy is important as it helps you to add a nominee, subtract any deceased members, update your health requirements etc. Conducting a periodical analysis of your insurance is important to stay up to date and eliminate any chance of mis-communication. Ideally you should review your health insurance and life insurance policy after all major events like marriage, birth, retirement etc. to avoid claim rejections. 

Restructure Your Portfolio

Restructuring your portfolio involves assessing your current finances and whether you will be able to achieve your financial goals before retirement or not. If your potential returns do not match up with the corpus you wish to attain before retirement, you can consider restructuring your portfolio. It is advised that you should restructure your portfolio periodically to achieve your goals in a timely and effective manner.

Clear Outstanding Debts

There are many events in life where you absolutely have to get a loan such as a medical emergency or buying a new house or even renovating your current home. Ideally you should form a repayment plan before applying for the loan.

You can efficiently repay your loan when you are employed and have a stable income, however repaying your loan after retirement might become difficult. Thus, most people wish to become debt free before retirement. Additionally, you can also aid your loan repayment by supplementing your income with passive earnings and investments.