A New Year means the chance for new financial goals. From making the most of your savings to making money on the side, here are seven money tips to help set up your finances for 2025.
1. Get a side hustle
Finding an alternative way to make money, separate from your normal job, can boost your finances. If you’re not sure what to do, rest assured that there are many ways to make money online and offline.
From selling something you can make, to freelancing or tutoring, a side hustle can allow you to make the most of your skills and get in some extra cash. Other ideas include renting out your spare room, or your drive for parking, or trading in your old phones and tech.
“The beauty of these alternative income streams is their flexibility – many can fit around your main job or home life,” says Laura Suter, director of personal finance at investment platform AJ Bell. “It’s also a great way to diversify your income, giving you a buffer against rising costs or unexpected expenses. But it’s important to consider the practicalities, like the time commitment and any potential tax implications. A side hustle can be as much about pursuing a passion as it is about boosting your bank balance, so finding something you enjoy can make it even more rewarding.”
2. Boost your credit score
You’ll usually need a good credit score to get the best credit cards, loans and mortgages. So making sure it is as polished as possible is always a good idea.
Checking for mistakes and errors on your credit report, and getting the credit agency to put them right, is a good starting point. Just as important, look at the various ways you can improve your credit score, such as making sure that you are on the electoral register.
Updating your records on the electoral register if you move house and ensuring repayments are made on time are straightforward steps that can improve your credit score, says James Robinson, managing director of consumer interactive at credit reference agency TransUnion in the UK.
“Don’t make several applications in a short period of time, and avoid keeping a high balance on your credit card,” adds Robinson. “Regularly checking your credit report and ensuring that the information on your report is accurate, and identifying simple steps to improve your score, can boost your chances of accessing credit and qualifying for better rates.”
3. Find the best savings rates
Savings rates have fallen a little in recent months, but they remain much higher than the rates available a few years ago.
If you’ve got a large sum of money in your current account, moving some of that to a savings account is likely to reward you with a better rate of interest. Or if you already have savings accounts, check whether you can switch to a higher interest rate. Also, if you’re over 18, there’s a £20,000 tax-free ISA allowance to make use of too.
“With interest rates on savings accounts still high, it’s the perfect time to shop around for the best deals,” says Suter. “High-interest easy-access accounts can give you flexibility, while fixed-term savings accounts often offer better rates if you can lock your money away for a period.
“ISAs are another fantastic tool to make the most of your money, offering a tax-free wrapper for your savings or investments,” adds Suter. “Whether it’s a cash ISA for short-term goals or a stocks and shares ISA for long-term growth, you’re boosting your returns by avoiding tax on interest, dividends, or capital gains. The key is to be proactive. Check where your money is currently sitting and see if there’s a better option. A little effort now could significantly boost your savings in the long run.”
4. Monitor your mortgage
After a year of ups and downs, mortgage rates seem likely to end 2024 lower than where they began. This means that if you’re a homeowner, new or old, it will pay to look around for a mortgage deal.
If you’re a first-time buyer, saving as big a deposit as you can is still key to securing a lower rate. And if you’re an existing mortgage borrower, keep a close eye on when your current deal is due to end.
Depending on the lender, it may be possible to arrange a new mortgage around six months before your existing one expires. Ahead of that, it’s a good idea to get your finances in check, and ready to apply.
“For those thinking about moving or remortgaging, it’s absolutely critical that they’re familiar with their current financial standing and ensuring that their information is accurate through their credit report and score,” says Robinson. “You should be looking at this at least six months ahead of applying for a mortgage to ensure you’re in the best financial position when the time comes. This can help consumers know what mortgage deals they are likely to be eligible for and can help access affordable rates.”
5. Always shop around
Whether you’re doing the weekly supermarket shop, or buying something bigger, it’s vital to shop around. Saving a few pounds here and there can quickly add up, so always check to see if you’re getting the best deal.
The same applies to your broadband, mobile and TV bills, and your energy bills — fixing your tariff is always worth spending time thinking about. Compare quotes when it’s time to renew any kind of insurance, as big savings can often be made.
“Whether it’s car insurance, home insurance, or travel cover, loyalty doesn’t pay — sticking with the same provider often means you’re hit with the ‘loyalty penalty’,” says Suter. “By comparing quotes each year, you can ensure you’re getting the best deal and often save hundreds of pounds. It’s also a great chance to review your coverage and make sure you’re not overpaying for extras you don’t need. Insurers count on us being too busy to switch, but a quick search or a phone call could leave you with more cash in your pocket.”
6. Keep on top of your debt
Staying on top of your debt repayments is a must all year round. If you don’t, there may be penalty charges, or negative consequences for your credit score, so it’s vital to always pay what you owe. If you can’t meet your obligations, let your lender know straight away.
Hopefully, you’ve been sensible in your Christmas spending, but if your credit card has taken on some of the festive financial strain, aim to clear it as quickly as you can. Pay off your credit card debt in one go and you may avoid interest charges, but if this isn’t possible, always try to make the minimum payment, at the very least.
“If your balance is high, ensure regular monthly payments are made and try to pay more than the minimum when you can,” says Robinson. “If you are struggling to pay down your debts, work out your monthly income and pay all essential outgoings in the first instance, such as mortgage or rent, utility bills and phone contracts.”
7. Check on your pension
It’s easy to put pension planning off, but as another year ticks by, you’re also another year closer to retiring. Regularly checking your pension is essential to make sure you’re on track for the retirement you want. If you’re not, you may need to think about increasing your contributions, if you can, to give your pension a boost.
“It’s also an opportunity to double check that your investments are still right for you, that they fit with your risk appetite and long-term plans,” says Suter. “It’s a good idea to track down your pensions too, if you have multiple pots in different places it can be hard to keep on top of them all. But it’s crucial to know where your money is and how much you have in each pension. You might want to consider combining them into one pot to make it easier to monitor.”
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