I’m a Retirement Planner: 6 Things You Shouldn’t Do at the Start of the New Year

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January is the perfect time to make some financial moves, like rebalancing your portfolio or making sure you’re getting the best rates from your high-yield savings account. But there are certain financial moves that can prove detrimental as you start the new year.

GOBankingRates spoke with two retirement planners, Jake Falcon and Lamar Brabham, about some things you shouldn’t do with your finances at the start of the new year. Here’s what they said.

Also see 11 ways to actually stick to your money resolutions in 2025.

Don’t Leave Your Portfolio As Is

For many people, having a well-diversified investment portfolio is key to their retirement planning strategy. If you’ve got a portfolio, don’t ignore it. Instead, take some time to reevaluate and rebalance it.

“With the stock market bumping up against all-time highs, now may be the time to rebalance your portfolio and [get] things aligned with your financial plan,” said Jake Falcon, CRPC, CEO of Falcon Wealth Advisors.

While you’re at it, Falcon also suggested taking a look at your 401(k) plan. Just because you set one up years ago at your employer doesn’t mean you should forget about it. You might find that there are better ways to manage your 401(k) that’ll align better with your retirement plans.

Don’t Take On Debt

A new year might mean a new you, but that doesn’t mean you should take on new debts.

“I would be [hesitant] to take on any additional debt,” Falcon said. “Interest rates, broadly speaking, are much higher than they were a few years ago … If there is an alternative to taking on a large amount of debt, like buying a new home or car, I would wait until interest rates cool off.”

According to Experian, the average U.S. consumer owed $104,215 in total debt in 2023. This includes things like mortgage loans, student loans, auto loans, credit cards and personal loans. That’s already a lot of financial responsibility, but interest rates can quickly eat into your cash flow and affect your retirement plans.

There are exceptions to this, however.

“With that being said, if you can get a home or car at a much reduced price, it may make sense to give it a look,” Falcon said. “The takeaway here is to avoid going into a transaction uninformed.”

Don’t Skip the Budget

According to a Debt.com survey, 90% of Americans have a budget, but that doesn’t mean they’re spending their money wisely.

According to Lamar Brabham, founder and CEO of Noel Taylor Agency, you should definitely make a budget if you don’t have one.

“The energy, enthusiasm and optimism that naturally come with a new year can get you swept into thinking you have more money than you do,” Brabham said. “Without an actual honest budget, it will be nearly impossible to hit your financial goals.”

Even if you have a budget, you should reevaluate it to make sure it still works in the new year and that it accounts for any changes to your finances.

“In your budget, be sure to include every dollar you’re currently spending and any additional expenditures you anticipate in 2025,” Brabham said. “Also, include short-term and long-term savings as budget items. A baseline budget will allow you to measure your performance. Good or bad.”

Once you’ve got a budget, Brabham suggested plugging in your goals for the year. That way, you can see if your income matches your spending and other needs.

Don’t Save Manually

If you earn a steady income, skip the manual savings and switch over to automatic contributions. This can help you meet your financial goals in the year to come.

“Put at least some of your money on autopilot,” Brabham said. “Payroll deduction is often available for retirement plan contributions or setting up a bank draft from your savings or checking account may work. Hopefully, if you don’t see it, you won’t spend it. Set up your budget early to have a wonderful and productive 2025!”

Don’t Ignore Your Interest Rates

The national rate cap on savings accounts is 5.33%, per the Federal Deposit Insurance Corporation, but many accounts offer much lower yields. If you have some money in savings, check to make sure you’re getting decent yields.

“Double check the interest you are receiving on your checking/savings accounts,” Falcon said. “If your bank is still paying little to nothing in interest, now may be the time to make a change. There are many options out there to consider. Make sure that whatever financial intuition you bank with has FDIC coverage and that you stay below the limits.”

Don’t Neglect Your Financial Plan

Sometimes, having a plan makes all the difference in succeeding in your short- and long-term goals. If you don’t have one, now’s the time to make one — either by yourself or with a professional.

“This is the year! Seek out a wealth advisor and build yourself a financial plan,” Falcon said. “Each and every person’s plan has its own nuance and it pays to work with a professional who is versed in advising you on exactly what you are looking to accomplish.”

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