Investing Insiders’ guide to taking control of your finances in 2026

The New Year often inspires people to make a positive change in their lives, be it starting a new hobby, eating more healthily or giving up a vice. But it’s also the perfect time to reset your finances and start building better money habits.

We’ve created a guide to follow to help you get on top of your finances so that by New Year 2027, you’ll be in a much better position.

1. Pay down your debts

Before you do anything else, prioritise paying off any loans or credit card debt. Most credit types charge interest, meaning you pay back more than you borrowed.

Start with debts that have the highest interest rates, such as payday loans or credit cards. These can be the most costly in the long run, and keep you trapped in a debt spiral.

Then, set a monthly payment amount. Treat your debt repayment like a savings plan – set aside a specific amount each month to pay down your debt and stick to it.

Consider setting up a direct debit for your debt payments right after payday to avoid spending that money, if you might be tempted. You can do this via your banking app.

2. Limit future credit spending

If your credit card debt is overwhelming, switch to using debit cards for future purchases. This helps control your spending and means you can’t spend more than you can afford to pay off.

Consider 0% balance transfer cards to help you clear your debt faster. If you have credit card debt, transferring it to a 0% interest card can help stop the debt from growing while you pay it off.

Once your credit card debt is cleared, set up a direct debit to pay off the full balance each month to avoid interest charges.

If you’re struggling with serious debt, contact organisations like StepChange (0800 138 1111), Citizens Advice (0808 223 1133), or National Debtline (0808 808 4000) for free and confidential support.

3. Audit your spending and subscriptions

Take an hour to analyse your bank statements from the past three months, and categorise your expenses to identify where you could cut back.

Look for subscription services you rarely use, and consider canceling those you don’t need or rotating your subscriptions monthly to save money.

For example, keep Netflix for a month, watch what you like, then swap to Disney+ rather than paying for all of them at once.

For services like gym memberships or phone contracts, ask if there are cheaper options available. Mentioning a potential cancellation can sometimes get you a better deal.

If you notice you’ve spent a lot on dining out or shopping, consider taking a break from these activities for a month. Save the money you would have spent.

4. Set up automatic savings

A good way to start saving is to automate it. Some banks offer features to help you do this, such as round-up options where purchases are rounded up, and the extra money is saved.

This can seem like a small way to start, but even saving small amounts can add up over time.

Consider using savings apps that help you set savings challenges, like the 1p challenge, where the amount you save increases by 1p each day, starting with 1p on day one, 2p on day 2, and so on. By the end of the year, you’d have almost £668 saved.

Challenges can be more fun and engaging than simply putting money side, and they give you an end goal to work towards. For example, the 1p challenge lasts for one year.

5. Build up an emergency fund

Before you get onto saving big sums, aim to save 3-6 months’ worth of expenses in an easily-accessible account as an ’emergency fund’ for unexpected disasters like a boiler breakdown.

Even saving £500 or £1,000 can provide a buffer during emergencies. Keep this fund separate from your other savings and spending accounts and avoid dipping into it for non-emergencies.

6. Get the best savings rates

A good way to boost your savings is to switch to accounts paying top interest rates. Digital banks often provide higher rates than traditional high street banks.

Consider using a Cash ISA, too. For long-term savings, a Cash ISA can offer tax-free returns, protecting your savings from taxes.

Be aware of your tax-free savings allowance – basic rate taxpayers can earn £1,000 in savings interest tax-free, while higher rate taxpayers can earn £500.

If you have significant savings and have maxed out your Cash ISA, consider fixed-rate accounts or bonds for better interest rates – but remember you may not have access to these funds until the term ends.

7. Start investing

Once your debts are cleared and you have savings, consider investing to potentially earn higher returns.

Start by opening an investment account, such as a Stocks and Shares ISA, and depositing some money. You can choose to manage the investments yourself or let a professional do it.

However, be aware that investments can go up or down in value and you could get back less than you invested.

Only invest money you can afford to leave for the long term (typically five years or more). This allows you to ride out short term market wobbles.

8. Set clear financial goals

Establish specific goals for what you want to achieve with your money, such as buying a home or enjoying a vacation. Treat savings for specific goals as untouchable funds to help you stay motivated.

For goals like retirement, saving and investing should be viewed as a long-term commitment, which should open up avenues like investing and fixed rate accounts.

9. Sort out your pensions

Make sure you contribute to your workplace pension, if you’re employed. You should be automatically enrolled unless you opted out.

Then, maximise the contributions you can afford to make. You can contribute more than the minimum to benefit from employer matching contributions, which is essentially free money.

Take advantage of tax relief, too. Pension contributions qualify for tax relief, where the government adds a percentage to your contributions, increasing your retirement savings.

If you’re self-employed, open a personal pension. There are two types: regular personal pensions and self-invested personal pensions (SIPPs), which offer more investment flexibility.

10. Check your credit report

Regularly check your credit report for free using services like ClearScore, Credit Karma, or Experian.

Ensure your report is accurate, as mistakes can affect your ability to borrow money. Address any inaccuracies to improve your credit standing.

By following these steps, you can take control of your finances, reduce debt, save effectively, and prepare for a secure financial future. You can contact us on hello@investinginsiders.co.uk if you have questions about any financial issues.