Four money experts share their advice on how to assess your personal finances and establish financial goals for 2025.

It's crucial for money experts to advise that in addition to reflecting on experiences and achievements, it's equally important to assess one's finances at the end of the year.

Keeping track of your spending has been challenging this year due to the gap between wage growth and the rise in the cost of living. In the U.S., Bankrate's 2024 Wage to Inflation Index shows that prices increased by 20% from January 2021 to June 2024, while wages only rose by 17.4% over the same period.

Nearly half of Americans are living paycheck to paycheck, according to a recent Bank of America survey.

Reflecting on finances at the end of the year can be beneficial, but it's crucial not to self-criticize, advised Tamara Harel-Cohen, co-founder of financial wellbeing app RiseUp, in a conversation with CNBC Make It.

Harel-Cohen advised against meticulously examining every expense because it's impossible to consistently achieve financial objectives.

Sarah Coles, head of personal finance at Hargreaves Lansdown, stated that there is always an opportunity to enhance one's money management skills.

Coles stated that while reaching the end of the year financially intact is a good sign, it's important to not overlook crucial aspects of your finances.

Four financial experts shared their top tips on reflection and money management as the year comes to a close, according to CNBC Make It.

‘Have self-compassion’

Vicky Reynal, a financial psychotherapist and author of "Money on Your Mind," stated that it's a common occurrence in December for individuals to feel embarrassed about their financial decisions.

Reynal advised, "One thing is to practice self-compassion. There's a common feeling that everyone should be better than they are."

Reynal stated that the lack of innate skill in managing finances is often not taught by schools or parents, which can hinder productive thinking about turning things around.

Reynal stated, "As we pick it up as we go, we'll inevitably make mistakes. However, instead of dwelling in guilt and shame, we can reframe it and ask ourselves: What can I do differently? What do I want to do differently financially next year?"

‘5 cornerstones of sound finances’

Hargreaves Lansdown’s Coles suggested an audit of five key money areas.

"It is crucial to assess the five essential components of sound financial management: Are you managing your short-term debts effectively? Do you have the necessary safeguards in place to protect your loved ones – such as life insurance and a will? Do you have sufficient emergency savings to cover three to six months' worth of essential expenses? Are you on track with your pension savings? And are you investing wisely to grow your wealth?" she emphasized.

Understanding your financial position in these five key areas can aid in establishing a budget and setting new financial objectives, Coles stated.

Don’t make budgeting complicated

Reynal claims that many money resolutions for the new year fail because they are overly complex.

Reynal advised people not to set up complex spreadsheets with numerous tabs for recording expenses, as it is not sustainable. Instead, he encouraged them to keep it simple and find the right tools.

She proposed utilizing budgeting apps and investment platforms that simplify the process for you.

By simplifying tasks and achieving small wins, you'll feel empowered and build confidence that you can accomplish more in the future.

A "five-minute check-in" with yourself in the morning about how you'll spend money during the day can help you make better decisions without feeling overwhelmed, as Harel-Cohen agreed.

Harel-Cohen emphasized that enhancing one's financial health is a long-term journey, not a short-term race.

Small, lasting improvements

Reynal states that one reason many money resolutions fail is due to being overly ambitious.

Small wins can help build confidence, agency, and momentum, she said, emphasizing the importance of setting small, actionable goals for success.

To achieve long-term goals such as holidays or retirement, Harel-Cohen recommended automating monthly payments into your savings account.

Once you've set it up, simply relax and let go of any concerns.

Consider your feelings

According to Ylva Baeckström, a senior lecturer in finance at King's Business School, it's okay to indulge in self-treatment on occasion.

Baeckström questioned, "Why does spending money always cause anxiety? And how did you feel after spending money on things you don't really need? Did it make you anxious or stressed or did it make you feel good?"

"If it made you feel anxious, you should change your habit. But if it made you feel good, it may be worth continuing to indulge in this particular pleasure. Allow yourself some pleasures that make you feel good and cut back on the expenses that make you feel anxious," she said.