Welcome to January 2026!
After the financial sprint through the 2025 autumn budget, followed by the holiday spending and the year-long struggle with the high cost of living and economic uncertainty, you might be entering the new year feeling slightly worn out, at least financially.
If you’ve struggled with financial planning and goal-setting in the past, the new year offers you a fresh start.
Loans and debts are extremely valuable financial tools, but only when used responsibly and for things that matter. However, when you struggle with money management, you may be borrowing for things that can best be avoided.
Some people consider short-term borrowing for unexpected expenses, like a quick loan of £1000 for emergency treatment for a pet or urgent home repairs. However, loans are generally not suitable for discretionary spending, such as holidays, and borrowing should always be based on individual circumstances and affordability.
That said, with proper planning and forecasting, you can set aside money for most of your anticipated expenses while having a buffer for emergencies. Want to set achievable financial goals in the current economic climate? Read on for some invaluable tips.
#1 Pay Off Debt
If you have any outstanding debts, you need to prioritise repayment. Timely debt repayment helps boost your credit score, which makes you eligible for better loan terms and allows you to avoid debt traps.
Here are some ways you may be able to achieve this:
- Determine if there is an early repayment charge (some lenders might charge this, while others don’t)
- Automate credit card and mortgage repayments, allowing you to avoid default or late payments
- Follow the avalanche or snowball method if you have multiple loans
- Always prioritise repaying payday and short-term loans that have a higher APR
#2 Build Your Emergency Savings
The need for quick loans, such as swiping your credit cards or taking out payday loans, happens because you lack substantial emergency funds. A crucial goal in the new year should be to build an emergency fund or top up your existing one. Your nest egg should be six months of your necessary expenses. For those with dependents, you must have at least nine months of savings.
Here is how to achieve this goal:
- Open a separate bank account or investment where the money remains separate from your savings account, to which your debit card or cash wallets might be linked. Ensure the emergency fund is easily accessible; do not keep the money in a Certificate of Deposit, which is difficult to withdraw.
- Do not invest emergency funds in high-risk areas, such as the stock market.
- Define the “emergencies” for which you can withdraw. Make a list and stick to it.
- Regularly reassess your needs and keep increasing the amount.
#3 Build a Pension Corpus
Have you yet to start investing towards your retirement? 2026 is your year to build a retirement fund that will allow you to live comfortably in your old age.
Here is how to achieve this goal:
- If you are a private-sector employee, check whether you can join your employer’s pension plan. Always understand the eligibility requirements: earning at least £10,000 annually, being over 22, and being a UK resident. Your employer makes a contribution, and a portion is deducted from your salary.
- You may also want to choose from different types of private pensions available. Always understand the risks associated with each, as well as the terms and conditions. Working with a personal financial advisor might be helpful.
- Consider using online pension calculators to determine the monthly contributions you need to achieve the retirement lifestyle you want.
#4 Become Financially Literate
Most working or self-employed professionals struggle to understand the nuances of economics, taxes and benefits available to them. This is detrimental to your financial well-being, but 2026 might be the year you change that narrative.
Here are some potential ways to make this possible:
- Learn about all the state benefits and allowances that you can avail.
- Understand the new tax laws and the ways you can maximise your savings while remaining compliant.
- Diversify your investments to improve your returns and also safeguard them against market volatility.
- Learn about budgeting techniques and investment methods. You must always undertake due diligence before investing or applying for loans.
In Conclusion…
A new year gives you fresh opportunities to change your story and become a better version of yourself. Whether your resolution includes getting fit or improving your finances, consistency and a strategic approach will help you stick to it.
Financial resolutions are the most common New Year’s resolutions; however, most people lose steam after a few months, and their goals fall wayward. Our guide offers you the best way to achieve your financial goals and end the year with economic security rather than fear.
Are you ready to achieve your 2026 goals?
