As the final echoes of Auld Lang Syne fade away, the start of the new year is the perfect time to review your finances and take stock of where you’re at – and where you’d like to be. From savings and investing to pensions and protection, a few simple steps now could have a big impact on your money situation, not only for the next 12 months, but potentially for many years to come.
When it comes to New Year’s resolutions – financial or otherwise – getting into sustainable good habits is much better than trying to change everything overnight. Alice Haine from Bestinvest, said: “Committing to a fresh set of resolutions has the potential to not only spruce up your personal finances for the year ahead, but also improve your long-term prospects.”
Reconsider your financial goals
The start of a new year is a sensible time to revisit your financial goals and what you need your money to do for you. This means standing back and reminding yourself of what you’re hoping to achieve over the short, medium and long term. If your goals have changed, you may need to review and adjust things, such as where you are squirrelling your money, or the level or risk you are taking with your investments.
Build an emergency fund
If you don’t have this vital savings pot in place already, now is the time to get serious about slotting money away in a rainy-day fund. This will act as a safety net to cover unexpected expenses, such as a broken washing machine, car breakdown or worse, job loss.
Your emergency fund should be equivalent to between three and six months’ worth of outgoings, and should be held in an easy-access account – separate from your current account. If you have expensive debts to repay, however, these should be the priority.
Tackle your household bills
When you review your finances you might well notice how much of your money is going on household bills such as energy, broadband, TV, mobile phones and other contracts, on top of rent or mortgage payments and council tax.
If you haven’t changed energy supplier for a while you might be able to switch to a cheaper tariff (especially with the energy price cap nudging up in January, though it’s expected to fall later in 2026). The same applies to broadband, mobile phone and insurance contracts as well, though you may need to wait until your existing deals end. Make a note of your renewal dates and shop around quickly before automatically renewing, as loyalty doesn’t always pay.
When it comes to phone, TV and broadband you might be better off with a bundle from the same provider. But bear in mind that this means tying yourself into a contract for all those services. Streaming services such as Netflix, Apple, Disney+ and Amazon Prime are becoming more expensive too. If you’re still using them all, see if you’re able to switch into a lower cost tier or package. If you’re not using them all, consider ending your subscription – you can always subscribe again later on.
Get into the savings habit
Kickstart a savings habit in 2026 by setting up a standing order or direct debit to move money from your current account into a savings account on the day you get paid. Automatic transfers are an effortless means of contributing towards your savings, helping you build a habit not just for this year but for the long term. You can then know exactly how much you have left for everyday expenses while your money works hard in the background. There’s a growing range of money saving apps out there that can help you maximise your cash savings.
Be sure to check your cash is earning a decent rate of interest. If your savings have been languishing in an old account for a few years, your money is almost certainly losing value to inflation. Compare savings accounts and cash ISAs using a site such as moneyfactscompare.co.uk and move your money to the best accounts on offer. But get your skates on, as the Bank of England base rate is tracking downwards and savings deals are gradually becoming less generous.
Think about investing
If you’ve already got a rainy-day fund in place and are turning your attention to goals that are at least five years away, this could be the time to think about dipping a toe into investing. While cash savings have their place to cover planned expenses in the next five years, your hard-earned money is at the mercy of inflation. This is where the stock market comes into play.
You may be worried about volatility and risk, but bear in mind that while markets will go up and down, stock market-based investments typically beat inflation over the long run. Remember you can also select investments that suit your risk appetite and you can diversify by spreading your money across different sectors, countries and asset classes. Moreover, you can dip a cautious toe into the water with as little as just £10 or £20 a month to begin with.
You need to be comfortable with the idea of tying up the money you are thinking of investing for at least five years – and ideally, more. And of course, there’s a place for both saving and investing – it’s not an either/or scenario.
Give your pension the once-over
If you haven’t checked the value of your pension pots recently, the start of a new year could be the ideal time to do so. You need to assess whether you’re on track to reach your retirement goals. Start by checking your State Pension forecast – visit gov.uk/check-state-pension. While you’re at it, don’t forget to track down any lost pensions, too. The Government’s Pension Tracing Service is a good place to start.
You should also receive an annual statement for any workplace and personal pensions you have – these will be sent by your provider. Check out online pension calculators that can help you decide if your current pension payments will be enough to fund your retirement. If there’s a shortfall, it’s worth seeing if you can up your contributions. You can make additional payments into your pension at any time. To top up your private or workplace pension, you can usually make both regular and one-off lump sum payments.
It may not feel like a priority, but a little saved now can make all the difference once you reach retirement. Remember, time in the market will make a huge difference to your pension and the snowball effect of compounding means even regular small contributions will build into a substantial pot over the long term.
Make the most of your tax allowances
You may be used to waiting until the end of the tax year in April to maximise your tax allowances, but there’s nothing to stop you doing so sooner. You can tuck away up to £20,000 into ISAs each year, where no income or capital gains tax will be due when your money is growing or when you take it out.
While a cash ISA offers a tax-free space for regular savings, dedicating too much to cash misses out on the benefits that come with an investment ISA. If you’ve got medium to longer-term financial goals – and a time horizon of five years or more – a stocks and shares ISA is the better bet.
Pensions are a really tax-efficient way to save as pensions tax relief means it will cost you less than you might think to pay into your pension plan. Most basic rate taxpayers get a 20% tax top up on their contributions, while higher rate taxpayers get 40% tax relief and additional rate taxpayers an extra 5% on top of that (the income tax thresholds are slightly different if you live in Scotland).
Get protection in place
You’ve probably got some insurance policies already, covering your car, holiday, pets or even your phone. But do you have insurance that protects the most important things – your income and your family? If you haven’t, now is the time to think about the likes of income protection, critical illness cover and life insurance.
Policies such as these will ensure your loved ones are looked after in the event of unexpected illness or death. Income protection cover pays a regular income if you are unable to work due to illness or injury, and critical illness cover provides a tax-free lump sum, payable if you contract one of a list of specified conditions. Life insurance will pay out a tax-free lump sum if you were to pass away.
If you’ve already got protection, it’s a good idea to ensure your policies still offer the right level of cover for your needs. You don’t want to leave loved ones short, should the worst happen. Getting the right protection in place could be one of the best things you do for your family, giving them long-lasting financial stability.
Write a will
The start of the new year is also a good time to sit down with loved ones and discuss your Will. That might mean navigating some tricky conversations with your children about what happens to your money when you die. But if you end up all on the same page about who is getting what, you’ll have saved a lot of heartache in the long run. Check our article on how to have those tricky conversations about money.
Writing a Will ensures your assets are distributed according to your wishes. And if you’re thinking about leaving a gift to a good cause in your will, check out Remember A Charity. If you’ve already made a will, see if it needs updating, especially if your circumstances have changed. Also take the time to draw up a ‘lasting power of attorney’, and to ensure beneficiaries on all accounts and insurance policies are up to date.
Don’t pay more than you need to
You might already shop around for the best energy, broadband, mortgage and other deals – but are you getting the best deal for your investments too? If you’re investing for the long term – potentially several decades – you’ll want to ensure that charges don’t eat into your growth too much.
This applies to the funds you use and the platform that you invest through. With interactive investor introducing a new pricing structure in February, and Vanguard among the platforms to have announced price changes in 2025, now is a very good time to check you’re still using the best platform for your needs – and that you’re not paying more than you need to.
The different types of platform fees and pricing structures used can make it hard to work out which will give you the best deal. You can run your own comparison using our free comparison tools, as the best platform for you will depend on your own preferences, objectives and circumstances.
