By Taylor Patlan
If managing money felt like an uphill battle in 2024, you’re not alone. The pressures of inflation, high interest rates, unexpected expenses and market uncertainty impacted everyone. But through planning and discipline, you can achieve stability, build wealth and create the life you deserve. This year, let’s focus on thriving, not just surviving.
To start, you must identify your money mistakes, obstacles, and behaviors from 2024. Be honest about the poor choices that kept you from reaching your financial goals. For instance, if you accumulated credit card debt and paid high interest rates in 2024, you’ll want to avoid making those same mistakes in 2025.
It’s never too late — or too early — to improve your financial status. To get started, determine your financial goals and what you want to achieve in 2025. Success requires discipline, strategy, and a clear understanding of your financial situation. Some of you will focus on reducing debt, others on building wealth, and some on saving $1,000 for an emergency fund. No matter where you are in your financial journey, there’s always room for growth.
Here are eight money strategies to help you thrive financially in 2025:
1. Set your budget for 2025 with clear goals
Building a budget is a key step in achieving your financial goals. Don’t be intimidated by the word “budget” or feel as if it restricts you. A budget is simply a tool that provides a clear picture of your spending habits, showing exactly where every dollar goes. If you’ve never closely examined your finances, now is the time to start preparing for 2025. You may be surprised by where your money is going — or how much you could actually save.
When creating a budget, it’s also important to include “fun money.” This is a designated amount set aside for guilt-free spending, allowing you to enjoy small indulgences without derailing your financial plan. Treat it as an essential part of your budget, helping you stay on track while still having room for enjoyment.
You don’t need to create a detailed Excel spreadsheet or go “old school” with pen and paper. Many apps can help you build and track a budget, and your bank may offer budgeting tools as well — so be sure to check what services are available.
If you’ve never built a budget before, a good starting point is to review your spending from the previous month and set goals for the next month based on that information. If your partner or spouse manages the budget, be sure to involve them by holding regular budget meetings. Working together fosters transparency and ensures everyone understands the family’s financial situation. Keeping financial secrets is one of the leading causes of stress in relationships, so open communication is key. The goal is to eliminate “money stress,” not create more of it.
Check out: The Total Money Makeover by Dave Ramsey
2. Make debt reduction a top priority
Officers, like most Americans, carry debt — whether it’s a car loan, student loan, mortgage, medical debt, or credit card balance. Debt can feel overwhelming, but having a solid strategy to reduce or eliminate it in 2025 is essential to your financial well-being. It’s difficult to save or invest when debt is holding you back.
One effective method for tackling debt is the debt snowball strategy. This involves listing your debts from smallest to largest (excluding your mortgage) and paying off the smallest first, regardless of interest rates. Once you pay off a debt, celebrate that small victory and roll the amount you were paying on it into the next debt.
Depending on the amount of debt you have, becoming debt-free may take time. But imagine, for a moment, a life without debt (aside from your mortgage) — the financial freedom and possibilities that come with it. Stay committed, and that vision can become your reality.
3. Boost your retirement savings early in 2025
Depending on where you are in your financial journey, maxing out your retirement and tax-sheltered accounts early is a smart way to prepare for the future. A good rule of thumb is to invest at least 15% of your income into your retirement account(s). Keep in mind that Social Security won’t replace your full income, so building your own retirement savings is crucial.
If your agency offers a match on your contributions, take full advantage of it — it’s essentially free money. When prioritizing retirement savings, remember: a match beats a Roth, and a Roth beats a Traditional account. This means contributing enough to get the full match first, then focusing on a Roth IRA if you qualify, followed by traditional retirement accounts. Making strategic retirement contributions now will set you up for long-term financial security.
According to the IRS, the 2025 contribution limits for retirement plans are increasing. The 401(k), 403(b), TSP (Thrift Savings Plan), and 457 plan contribution limit for those under 50 will rise to $23,500, up from $23,000 in 2024. For those 50 and older, the catch-up contribution will remain $7,500 in 2025, the same as in 2024.
If you have an IRA, the 2025 contribution limit is $7,000 for those under 50 and $8,000 for those 50 and older, unchanged from 2024.
Additionally, under the SECURE 2.0 Act of 2022, employees aged 60 to 63 who participate in 401(k), 403(b), and 457 plans qualify for a higher catch-up contribution limit. In 2025, this limit increases to $11,250, up from the standard $7,500.
These increased limits provide an opportunity to maximize your retirement savings and take advantage of tax benefits.
Check out: Baby Steps Millionaires by Dave Ramsey and 401(k) limit increases to $23,500 for 2025, IRA limit remains $7,000
4. Strengthen your investments with portfolio diversification
If you own any investment portfolios, diversification is key. It’s one of the smartest financial moves you can make in 2025 to boost your net worth. A well-diversified portfolio helps you manage risk, maximize returns, and improve stability, ensuring your investments can weather market fluctuations.
Taking proactive steps now, such as re-evaluating your investment allocations, can help you adapt to market shifts and position your portfolio for long-term growth.
And if you think this doesn’t apply to you — think again! Most law enforcement pensions and retirement accounts are structured as investment portfolios. Contact your agency’s retirement system to better understand how your funds are being managed and explore ways to optimize your investments for a more secure financial future.
5. Build your emergency fund
Preparing for the unexpected must be a priority because emergencies can happen at any time. It’s not a matter of if — but when. Some unexpected events can be devastating, pushing you further into financial hardship if you’re not prepared.
If you’re unsure where to start, begin by building a small emergency fund of $1,000. This can cover minor emergencies like car repairs, a broken phone, or unexpected medical expenses. If saving $1,000 feels challenging, consider cutting back on non-essentials, selling items in a garage sale, or pausing aggressive debt payments (while still making minimum payments to stay current).
Once you’ve built that initial safety net, work toward a larger emergency fund covering 3 to 6 months of expenses. It’s best to become debt-free (excluding your mortgage) before focusing on this larger fund. The amount you save should reflect your financial situation and lifestyle, ensuring you’re prepared for whatever life throws your way.
6. Prepare for tax season and take advantage of tax breaks
Pay attention to tax changes that may impact your deductions and credits when filing in 2026 for the 2025 tax year.
According to Newsweek in its article “IRS Changes Tax Rules for 2025,” the exemption amounts are increasing:
- Unmarried individuals: $88,100
- Married individuals filing separately: $68,650
- Married couples filing jointly: $137,000
For taxpayers claiming the Earned Income Tax Credit (EITC) with three or more children, the maximum credit will rise to $8,046, up from $7,830.
If you have a medical savings account, the yearly deductible for self-only coverage will be at least $2,850, with a maximum out-of-pocket expense of $5,700.
When filing in 2025 for the 2024 tax year, law enforcement officers may be eligible for special tax deductions that the general public does not have. Some job-related expenses may not be covered by your employer or reimbursed, yet they could still qualify as deductible expenses.
Check with your tax preparer to understand your filing deduction options. Some potential tax deductions for police officers include:
- Uniforms
- Association dues
- Vehicle mileage and gas
- Dry cleaning
- Protective gear
- Meals
- Continuing education courses
- Lodging and travel
7. Increase your income stream
If income is your challenge, there are only two ways to fix it: make more money or cut back on expenses:
- Leverage your training and experience: If you’ve earned specialized training or certifications during your career, look for ways to monetize those skills. These could open doors for side income opportunities or even post-retirement employment in areas such as consulting, teaching, or security work.
- Pick up extra overtime (wisely): Taking on extra overtime can boost your income, but be cautious about relying too heavily on it. Trying to “out-earn” poor financial habits can create a vicious cycle of overworking without real financial progress. Ensure that any extra hours you take on align with your financial goals rather than just covering up past mistakes.
- Sell something: Decluttering can be financially rewarding. A garage sale or selling unused items online can generate quick cash while also simplifying your space.
- Cutting back without feeling restricted: Cutting expenses doesn’t mean giving up fun — it’s a temporary strategy to redirect your money more intentionally. Small adjustments can free up more cash than you realize, helping you reach financial goals faster without feeling deprived.
8. Review your auto-payments and subscriptions
“Out of sight, out of mind” can work in your favor when autopay ensures bills are paid on time, but it can also lead to financial blind spots if you’re not keeping track of recurring charges.
For example:
- Your cable bill may increase without notice.
- Unexpected fees could be added to a bill.
- Utility costs may fluctuate seasonally, causing a spike in your electric bill that goes unnoticed.
You might also be paying for the same service twice. For example, some streaming channels are included in your cable package, but if you haven’t linked your accounts, you could be double-paying for them.
Regularly reviewing autopayments and subscriptions can uncover hidden expenses and help you find cost-effective alternatives — getting you closer to your financial goals without unnecessary spending.
Take control of your financial future
2025 is your opportunity to turn financial challenges into triumphs. The road to stability and growth starts with small, intentional steps. Whether your focus is on reducing debt, growing savings, preparing for retirement, or building wealth, the key is consistent, purposeful action.
Reflect on the lessons of 2024. Every dollar you manage wisely today is a step toward a more secure and prosperous tomorrow. By staying disciplined and proactive, you can take control of your financial future and achieve the peace of mind you deserve.
Additional resources
Ramsey Solutions. A proven plan for financial success. RamseySolutions.com.
GOBankingRates. I’m a financial planner: 7 financial tips to get ahead in 2025. Nasdaq.
Blake S. IRS changes tax rules for 2025: Full list of who’s impacted and how. Newsweek. October 22, 2024.
Ihz A. 12 smart money moves to make in 2025. Anthony Ihz. September 4, 2024.
Internal Revenue Service. 401(k) limit increases to $23,500 for 2025, IRA limit remains $7,000.
L Z. Tax deductions for police officers. Pineapple Money. June 3, 2022.
About the author
Taylor Patlan started as a trooper in public safety after graduating from the University of Wisconsin-Madison. She has been employed as a trooper for eight years. Taylor has worked in patrol, the trooper training unit as an academy counselor, the tactical marine unit and is currently a training coordinator.
Taylor is a Master Police Instructor, and a certified Financial Management Coach through Ramsey Solutions. Taylor feels her greatest project in public safety is revamping the financial program within her agency.
