4 Simple Ways to Improve Your Finances in 2025
- Creating a budget could help you improve your financial situation.
- Getting your spending under control could free up money for other purposes.
- Paying off credit card debt and saving an emergency fund helps you avoid the debt cycle.
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Setting financial goals is an important part of being successful with money. You should set those goals based on your personal situation, since people start from different financial places. If you’re in debt, you may want to explore debt relief options, and if you’re debt-free, you may want to focus on investing for the future. In both cases, you’d be improving your finances.
While we all come from different places financially, there are four simple steps everyone should consider taking to improve their financial situation. Let’s look at some key ways to set yourself up for financial success.
1. Make a Budget
A budget is your blueprint for financial success, and creating one is one of the best ways to improve your finances.
Everyone should have a budget, no matter their other financial goals.
A healthy budget ensures you're using your money as wisely as possible and spending according to your values.
Fortunately, it's really simple. First, decide what kind of budget you want to make.
A zero-based budget gives every dollar a job. If you want maximum control over spending, this is a good solution. While it takes a little more time to set up than some other budget types, it’s a great way to make sure every dollar you bring in gets allocated to the things that are most important to you.
A 50/30/20 budget is faster to create. You devote 20% of your money to saving, 50% to fixed expenses like food and housing, and 30% on discretionary expenses. As long as you can stick to these limits, this option is a fast and simple way to create a budget.
You can use our personal budgeting worksheet to input your income and expenses and get started with the budgeting process.
Using a budget could help you avoid wasteful spending and make sure you're devoting enough money to your goals.
2. Get Your Spending Under Control
Once you have a clear picture of where your finances stand, it’s time to fine-tune your budget to spend less than you make. Cover necessities first, and get rid of any expenses that don’t add much value to your life. That way, you have more to put toward debt, savings, and financial goals.
Read up on money-saving tips and pain-free ways to cut back. For example, perhaps you could dine out less, run the air conditioner at a higher temperature, or, if you need to make a big change, downsize to a smaller home. Saving even small amounts adds up over time, and gets you another step closer to your financial goals.
3. Build Your Emergency Fund
If money is tight, there may not be much left over after you calculate your necessary expenses and allocate money to debts. But if you’re committed to improving your finances, it’s absolutely crucial to set aside some funds to cover unforeseen costs.
Building an emergency fund is arguably the most important goal you can embrace to help improve your finances.
Unexpected expenses happen to everyone.
Life is unpredictable, and no one knows when a layoff, major home repair, or medical emergency may come up. Depending on your situation, you need three to six months’ worth of living expenses set aside in a savings account. Otherwise, you could end up resorting to credit cards when you’re in a bind. That could quickly set you on a downward spiral into debt.
4. Get Rid of Your Credit Card Debt
Perhaps the best way to improve your finances is freeing yourself from credit card debt.
You’re paying extra for everything you charge if you carry credit card debt.
Not only does paying off your debt free up extra money in your budget, it could save you a fortune in interest charges. Getting rid of credit cards relieves financial stress for just about everyone.
There are many ways you could get credit card debt relief, depending on your current financial situation.
A DIY debt payoff plan is usually the first thing people try. If you have extra cash each month, use that money to pay down your debt more aggressively.
You could also get credit counseling if you have stable income but you can’t seem to get a handle on your finances. A credit counselor helps you to make a budget and create a plan to become debt-free over time.
If you genuinely can’t afford to fully repay your debts, consider debt settlement. Settling a debt means getting your creditor to agree to accept less than you owe and forgive the rest. Creditors might do this if it’s clear that you have a financial hardship. You can settle your own debts or work with a professional debt settlement company.
No matter how you choose to handle your situation, getting rid of your credit card debt is likely to improve your finances and help you reach your financial goals faster.
If you’re exploring ways to improve your finances, these tips can help equip you to reach your financial goals. And, with your thoughts no longer locked into worrying about money, you can devote more energy to family, friends, and the things you truly enjoy.
Debt relief by the numbers
We looked at a sample of data from Freedom Debt Relief of people seeking credit card debt relief during May 2025. This data reveals the diversity of individuals seeking help and provides insights into some of their key characteristics.
Credit card tradelines and debt relief
Ever wondered how many credit card accounts people have before seeking debt relief?
In May 2025, people seeking debt relief had some interesting trends in their credit card tradelines:
The average number of open tradelines was 14.
The average number of total tradelines was 24.
The average number of credit card tradelines was 7.
The average balance of credit card tradelines was $15,142.
Having many credit card accounts can complicate financial management. Especially when balances are high. If you’re feeling overwhelmed by the number of credit cards and the debt on them, know that you’re not alone. Seeking help can simplify your finances and put you on the path to recovery.
Collection accounts balances – average debt by selected states.
Collection debt is one example of consumers struggling to pay their bills. According to 2023, data from the Urban Institute, 26% of people had a debt in collection.
In May 2025, 30% of debt relief seekers had a collection balance. The average amount of open collection account debt was $3,203.
Here is a quick look at the top five states by average collection debt balance.
| State | % with collection balance | Avg. collection balance |
|---|---|---|
| District of Columbia | 23 | $4,899 |
| Montana | 24 | $4,481 |
| Kansas | 32 | $4,468 |
| Nevada | 32 | $4,328 |
| Idaho | 27 | $4,305 |
The statistics are based on all debt relief seekers with a collection account balance over $0.
If you’re facing similar challenges, remember you’re not alone. Seeking help is a good first step to managing your debt.
Regain Financial Freedom
Seeking debt relief can be the first step toward financial freedom. Are you struggling with debt? Explore options for debt relief to regain control of your finances. It doesn't matter how old you are or what your FICO score or credit utilization is. Take the first step towards a brighter financial future today.
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Author Information
Written by
Tammi Huang
Tammi Huang is a Marketing Manager at Freedom Debt Relief. Her goal is to help people adopt better money habits and improve their financial health. She wholeheartedly believes that spending less doesn’t mean living less. When she’s not writing, Tammi fills her free time working on home design projects, trying new restaurants, and exploring dog-friendly spots with her rescue pup.
Reviewed by
Kimberly Rotter
Kimberly Rotter is a financial counselor and consumer credit expert who helps people with average or low incomes discover how to create wealth and opportunities. She’s a veteran writer and editor who has spent more than 30 years creating thousands of hours of educational content in every possible format.
How can you become more financially stable in 2025?
The right approach to improving your financial stability depends on where you currently are financially, including whether you owe money or have an emergency fund. For most people, creating a budget, reducing your spending, and paying off debt are good ways to become more financially stable.
What is the 50/30/20 rule of money?
The 50/30/20 rule of money says you should keep fixed expenses to 50% of your budget, spend 30% of your budget on discretionary purchases, and save 20%. This is a simple and quick approach to budgeting that helps you use your money in the best way to set yourself up for future financial success.
What are the best financial goals for 2025?
The best financial goals for 2025 depend on your personal situation. If you have high-interest debt, you may want to come up with a plan to get rid of it. If you’re debt-free, you may want to focus on investing. Think about the current state of your finances and what you hope to accomplish. Set specific, measurable goals.
Personal Finance
Personal Finance
