6 Ways To Elevate Your Finances Ahead

6. Eliminate Debt and Create a Strong Budget

Debt can be a major barrier to financial freedom, so it’s crucial to take steps to reduce it. If you’ve been diligent about managing your debt, consider ways to accelerate the process. For example, if you’re expecting a raise or a year-end bonus, use that extra income to pay down high-interest debt, such as credit card balances or personal loans, Morgan Stanley advises. The more aggressively you tackle high-interest debt, the less you’ll pay over time, and the more money you’ll have to save in 2026.

Along with eliminating debt, it’s essential to revisit your budget as you prepare for the new year. Assess your monthly income and expenses, then determine your financial priorities. With inflation still impacting everyday costs like groceries and gas, your budget might need adjustments to account for rising prices. One helpful method for budgeting is the 50-30-20 rule, popularized by U.S. Senator Elizabeth Warren in her book All Your Worth: The Ultimate Lifetime Money Plan, according to Investopedia. This rule divides your after-tax income into three categories: 50% for needs (such as housing and utilities), 30% for wants (like dining out or entertainment), and 20% for savings and debt repayment.

Paying off debt and following a tight budget can be cumbersome and downright annoying, but following this structure can help you to ensure that you’re not only covering essential expenses but also building toward a more secure financial future.