How to build an emergency fund, reduce debt, and plan your money for 2026

The start of a new year often renews attention on personal finances. Many people reassess debt, savings, and long-term security. As households look ahead to 2026, the focus is shifting away from sweeping resolutions and toward practical, trackable plans.

Financial planners say the new year offers a clear moment to reassess priorities. This is especially true after several years of economic uncertainty, job changes, and rising living costs.

“New Year’s is a really good time to review and realign your financial goals overall,” said Erica Grundza, a certified financial planner at Betterment, an investing and savings platform.

Rather than focusing on past mistakes, Grundza encourages people to look forward with realism and optimism. She advises reconnecting with the purpose behind financial decisions. That may mean saving a small amount each week or preparing for a major goal, such as buying a home. The path, she says, depends on individual circumstances.

Making achievable plans

Financial goals often fail when they feel too large or abstract, said MarieYolaine Toms, founder of the financial coaching firm Focused Fire. She encourages people to replace resolutions with clear plans that allow adjustments along the way.

“I am not making resolutions,” Toms said. “I’m making plans that can be tracked forward, traced back, and tweaked until completion.”

As a starting step, she often advises clients to review their credit reports from the three major credit bureaus. From there, they can set realistic savings targets. For some, that may be as simple as adding $25 a week to a savings account.

Creating a budget is often the foundation of any plan. Some people use structured methods such as the 50/30/20 framework. Others choose a different approach. Financial experts say the most effective budget is one that matches a person’s income, spending habits, and daily realities.

Paying off debt

Job disruptions continue to shape financial decisions for many households. Rachel Pelovitz, 33, reassessed her finances after losing her job as a magazine editor in September. Her husband had also faced a long period of unemployment, and the couple had accumulated significant debt.

After reviewing their options, they decided to sell their home and work with a debt consolidation organization. They chose this route instead of taking on more borrowing.

“Rather than rely on getting more debt, we are currently selling our house,” Pelovitz said.

Her main goal for 2026 is to pay off half of her credit card debt. She also plans to begin investing cautiously using some of the proceeds from the home sale.

Financial counselors note that people facing layoffs often need to focus on essentials first. They also stress the importance of seeking guidance and protecting mental well-being during periods of financial strain.

Building a savings account

For Jenni Lee, 27, the coming year marks a renewed effort to build savings. While she considers herself generally responsible with money, she said recent overspending pushed her to reassess her habits.

Her long-term goal is to buy a home. To support that plan, she is making changes now.

“I’m now in my late 20s,” said Lee, a Chicago-based tech worker and lifestyle content creator. “I’m starting to think about where I can cut back now so it won’t hurt later.”

As she saves for a future home and a possible trip to South Korea, Lee plans to reduce discretionary spending. That includes cutting back on clothing purchases and dining out.

Consumer finance experts say social media trends often drive impulse spending. Limiting exposure to those influences and setting firm spending boundaries can make it easier to stay on track.

Building an emergency fund

For those who can manage multiple goals at once, combining debt repayment with savings can strengthen financial stability. Melanie Duarte, 23, said her 2026 goals include paying down student loans and credit card debt while continuing to build an emergency fund.

“I made sure to include it in my budget, even if it’s something as small as $50,” said Duarte, who runs a marketing agency in Worcester. “I want to keep adding to it so it can grow over time.”

Duarte said her family rarely discussed money when she was growing up. Starting her own business forced her to develop stronger financial habits and a clearer understanding of planning.

Personal finance specialists widely recommend emergency funds as protection against unexpected expenses. They advise adjusting contributions based on income, debt levels, and living costs.

Finding balance

Balancing long-term security with present enjoyment remains difficult for many, especially younger workers. Tiana Stewart, 26, said the death of her grandfather shortly after retirement shaped how she views money.

Last year, she focused on travel and experiences.

“I understand saving for retirement is important,” said Stewart, who lives in Maryland. “But I also want to enjoy my life and the money I earn, especially in my 20s.”

As she looks ahead, Stewart plans to place more emphasis on paying off debt, saving, and investing. At the same time, she wants to leave room for meaningful experiences.

Some people use structured limits, such as no-buy months or longer challenges, to reset spending habits. Financial planners say these approaches can help clarify priorities when applied thoughtfully and realistically.