How to build an emergency fund, pay off debt and make a plan for your
money in 2026
[December 30, 2025] By
ADRIANA MORGA
NEW YORK (AP) — 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.
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A canning jar filled with money sits on a shelf in East Derry, N.H.,
June 15, 2018. (AP Photo/Charles Krupa, File)
 “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.
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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.
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