4 Ways To Start The New Year On The Right Financial Foot

We have a whole year ahead of us. Fifty-two weeks. Three hundred sixty-five days. Eight thousand seven hundred sixty hours. That’s a lot of time to plan for the new year and reach your goals. Whether it’s to save more, make a large purchase, or tackle debt, let’s start 2026 on the right financial foot.

Refresh Your Budget

A healthy financial habit is to keep a budget. A budget is a financial plan that estimates future revenues and expenses, providing a big picture for individuals to manage their finances more effectively. A budget should have the basics like food, shelter, gas, any subscriptions, and miscellaneous expenses like clothing and maintenance. If you have a budget, when was the last time you reviewed it? Start 2026 by reviewing your budget and finding ways to optimize it!

  • Assess last year’s spending habits. Identify patterns and determine if you need to increase your budget or if there is a way to cut back.
  • Try to update your budget monthly to account for new bills and expenses that may not occur every month, like car insurance or quarterly house maintenance.
  • Got a raise sometime in 2025? Make sure your new revenue is reflected in your budget to accurately allocate funds.
  • The best budgets are realistic, not restrictive. Build in a buffer for unexpected expenses that occur throughout the month; this way, you won’t see red at the end of the month for an expense you couldn’t avoid.

The goal of a budget is to help track spending, set financial goals, and efficiently allocate funds and resources for necessary expenditures. An outdated budget can take you further away from your financial goals.

Plan Ahead For Vacation & Big Expenses

Do you know what else budgets can help with? Vacation and other planned big expenses! Identifying big ticket items like vacations, home repairs, tuition, or holiday travel can help create a dedicated savings strategy for these items. For example, if you have a vacation planned in July, make sure there is a column in your budget to ensure you are setting aside funds every month.

Another way to plan ahead is to estimate the cost of large expenses and look for savings. This will also help determine how much you should be setting aside each month. Continuing with the example of a vacation, here are some helpful ways to start:

  • Create an itinerary and estimate the costs of travel, hotel reservations, food, and entertainment (don’t forget about tips for service staff)
  • Look for ways to save early, like booking your hotel or finding your flight sooner rather than later to lock in a better rate
  • Take advantage of seasonal sales. If you know your vacation dates, watch for seasonal sales for steeper discounts
  • Use rewards or cashback programs linked to your local financial institution’s debit or credit card

Prioritize Savings

The beginning of the year is a great time to look at your financial foundation: savings. Just a few smart money moves can make a huge difference in strengthening your savings and reaching your future goals.

Build or Rebuild Your Emergency Fund

Do you have an emergency fund? If an unexpected expense arises, do you have a financial cushion to keep yourself from accumulating too much debt? An unexpected expense can range from a flat tire to replacing the HVAC system in your house. Having an emergency fund can reduce money stress in these moments. Typically, it is recommended to have 3-6 months of your income set aside for situations like this. However, if you don’t have an emergency fund yet, setting aside $1,000 is a great start!

If you already have an emergency fund, assess its current situation. Did you have to dip into it in 2025? If you did, it’s time to rebuild it! Here are some tips for building an emergency fund:

  • •Create a separate savings account. Keep emergency money out of your everyday spending flow to avoid accidental use.
  • Automate contributions. Schedule weekly, biweekly, or monthly transfers so your fund grows consistently.
    • Pro tip! If you set your transfer to happen on payday, you won’t even notice it’s gone!

Review Retirement Investments

Whether your plan is to retire within a year or 20+ years, it is always a good idea to check your retirement investments. Here are some things you should review at the beginning of 2026:

    • Check your current contribution rate. Double and triple check that you are contributing enough from your paycheck to meet your retirement goals.
    • Take advantage of employer matches. As an incentive, employers may match your paycheck contributions up to a certain percentage. If you aren’t at that percentage already, consider upping your contribution to avoid leaving free money on the table.
    • Revisit your investment mix. Ensure allocations match your age, risk tolerance, and timeline. For example, if you are retiring within 5 years, you may want to switch your investment mix to more guaranteed bonds rather than stocks.
    • Update beneficiaries and account information. Keep your account aligned with your current life stage and with the people who matter the most.

Tackle Your Debt

Is the weight of debt heavy on your shoulders this year? Make it your New Year’s resolution to tackle it! Tackling debt doesn’t have to be complicated. With a few intentional steps, you can make steady progress and free up more room in your budget for the things that matter. Here’s how:

    • Get a clear picture of what you owe. Make a list of outstanding balances, including credit cards, personal loans, auto loans, and other debts.
    • Note the interest rate and minimum payment for each loan. This will help determine which debt to work toward paying off first.
    • Choose a payoff strategy. The two common debt payoff strategies are the snowball and avalanche methods. The snowball method focuses on paying off smaller balances for momentum and quick wins. The avalanche method focuses on high interest rates to save more in the long run.
    • Look for ways to reduce interest or simplify payments through debt consolidation options or balance transfer options. Debt consolidation is where you move all your debt to one account for one, easier-to-manage monthly payment. Balance transfers can help pay down principal faster since financial institutions typically offer low or zero interest for periods of time.

However, if you plan to pay off your debt, track your progress regularly and let small wins fuel your momentum!

Starting the year on the right financial foot doesn’t require dramatic changes—just a few intentional steps that build momentum over time. Whether you’re refreshing your budget, prioritizing savings, planning ahead for big expenses, or tackling debt, each move brings you closer to a more confident and stable financial future.