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    Home»Business»Realigning your money in 2026: How to pay off debt and build savings
    Business

    Realigning your money in 2026: How to pay off debt and build savings

    Team_Benjamin Franklin InstituteBy Team_Benjamin Franklin InstituteDecember 30, 2025No Comments6 Mins Read
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    The start of a new year usually brings new motivation to achieve goals like eating healthier or finally cleaning your basement. Many resolutions also focus on financial goals, such as paying off credit card debt, saving for a new house, or simply getting more educated about money.

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

    When building your goals for 2026, Grundza recommends focusing less on the past and more on an optimistic, yet realistic, vision for the future. She recommends that you focus on reestablishing the “why” behind your approach to money and how you want to make it work for your life. This can be as simple as saving $10 each week in a savings account, or a bigger goal like saving to buy a house in the coming years. It’s all about your own journey.

    The Associated Press spoke with people who are making financial resolutions for 2026. Here’s a look at what they’re planning and how you can draw inspiration for your own resolutions:

    Making achievable plans

    Resolutions can easily turn into unattainable goals that feel more like a dream, said MarieYolaine Toms, a coach and founder of Focused Fire, a financial coaching company. To avoid setting unrealistic expectations, Toms follows a “no resolutions” mindset and instead focuses on making an actionable plan.

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

    Recently, Toms encouraged her clients to check their credit report with the three credit bureaus and, based on their credit reports, make an attainable plan to start a savings account. For example, adding $25 to their savings account every week.

    Whether you’re trying to pay off debt or save for a vacation abroad, the first step towards making a plan can be creating a budget. When making a budget, it’s best to find a technique that works for you, whether it’s the classic 50/30/20 plan or another budgeting style.

    If you’re building a budget for the first time, you can find some expert recommendations here.

    Paying off debt

    After losing her job as a magazine editor in September, Rachel Pelovitz, 33, had to take a closer look at her finances. Having acquired a significant amount of debt over the last few years due to her husband’s year-and-a-half-long unemployment, Pelovitz explored several options to pay it off. Ultimately, Pelovitz and her husband chose to sell their house and work with a debt consolidation organization.

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

    Pelovitz’s main goal for 2026 is to pay off half of her credit card debt. And, with some of the money from selling the house, start investing moderately.

    If you’ve also experienced a layoff, you can read expert recommendations to help you take care of your finances and your mental health here.

    Building a savings account

    For Jenni Lee, 27, this is going to be the year when she gets strict about building her savings account. While Lee considers herself generally good with money, over the last six months she has overspent and wants to rein it in. The long-term goal for her savings journey is for Lee to buy a house.

    “I’m now in my late 20s, I’m starting to really think about where I pinch now so it won’t hurt later when I finally decide to purchase and own a place,” said Lee, a tech worker and lifestyle TikTok creator based in Chicago.

    As she saves for her future home and possibly a trip to South Korea, Lee wants to cut unnecessary spending on clothing items and eating out.

    Social media microtrends are a common influence on people’s shopping decisions, and this can lead to overspending. If you’re looking to avoid spending money on microtrends, you can find experts’ recommendations here.

    Building an emergency fund

    If you are in a position to do so, having multiple financial goals you’re working towards at the same time can be a great way to speed up your progress. For Worcester resident Melanie Duarte, 23, her New Year’s money goals include paying off her student loans and credit card debt while building an emergency fund.

    “I made sure to include it in my budget, even if it’s something as small as like $50. I just want to make sure I still put something in (my emergency fund) so that it eventually multiplies,” said Duarte, who owns a marketing agency.

    Duarte’s family didn’t speak openly about finances when she was growing up. But, since she opened her own business, Duarte has been slowly working on rewriting her relationship with money.

    If you’re looking to start an emergency fund or create better habits while you save, you can read some experts’ recommendations here.

    Finding balance

    Finding a balance between saving for your long-term goals while also making sure you enjoy your money is important, but it can also be challenging. After the death of her grandfather just a few years after retirement, Tiana Stewart, 26, felt that he didn’t get to enjoy the fruits of his labor. So, this past year, Stewart decided to enjoy her life and travel.

    “I do understand saving for retirement is important, but I also want to enjoy my life and the money that I work for at this time, especially being in my 20s,” said Stewart, who lives in Maryland.

    But now, as she reflects on her financial future, Stewart wants to focus on paying off debt, saving, and investing. Having a healthy balance between enjoying life and saving for the future is what she wants to work toward.

    For some, participating in budgeting challenges such as the no-buy year can be a great way to set boundaries on your spending and set aside money towards your financial goals. Many people start such challenges at the beginning of the year and commit to keep going until the end, but others start with a no-buy month.

    __

    The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.

    —Adriana Morga, Associated Press



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