As 2026 unfolds, many individuals are prioritizing a financial reset to gain control of their finances. Rajan Lakhani, head of money at the personal finance app Plum, emphasizes the significance of this opportunity. He states, “Having a financial reset is an opportunity where if you haven’t been managing your finances in a way that you would have wanted to, you can actually start again.” Lakhani highlights that the New Year fosters optimism, encouraging people to explore available financial solutions.
To effectively reset your finances, Lakhani suggests five key strategies.
Understand Your Financial Position
The first step is to gain a clear overview of your finances. Lakhani recommends starting by checking your bank account to see your current balance and savings. “Check any debts you may have and see this against what you are spending on a regular basis,” he explains. Utilizing bank statements or connecting your account to a financial app can simplify this process.
“Knowledge is power,” Lakhani adds, encouraging individuals not to fear this assessment. Understanding your financial situation lays the groundwork for informed decision-making.
Evaluate Subscriptions and Payment Plans
Next, Lakhani advises reviewing your subscriptions. With numerous streaming services available, it is crucial to identify which platforms you regularly use. Government research indicates that forgotten subscriptions can cost consumers approximately £1.6 billion annually.
Lakhani notes that many people sign up for gym memberships in January but may not attend regularly. “Make sure you’re picking the right plan for you and your circumstances,” he advises. Consider payment options that suit your budget, including potential discounts for upfront payments.
Implement a No-Spend Challenge
A popular strategy for financial resetting is undertaking a no-spend month. This approach involves refraining from non-essential purchases, such as dining out or buying snacks. “Making your own lunch could save you a lot of money,” Lakhani suggests, emphasizing how quickly small expenses can add up.
Additionally, Lakhani highlights the 1p challenge, a year-long savings method where participants save one penny on the first day and increase the amount by one penny each subsequent day. By the end of the year, this could accumulate to almost £668.
Utilize Automated Savings Tools
Another effective method is to employ rounding tools that round up purchases to the nearest pound. Lakhani explains that this approach allows individuals to save without feeling the financial impact. Most users find that the money saved through this method accumulates rapidly, as it operates automatically.
“The key thing with these challenges is they’re automated,” he notes. This feature allows people to save without having to think about it actively.
Maximize Benefits and Tax Breaks
Lastly, Lakhani underscores the importance of maximizing government benefits and tax breaks. For instance, married couples may be eligible for a married couple’s allowance, which can provide financial relief if they have children.
It is also essential to take advantage of free childcare hours and ensure that family earnings align with eligibility for child benefits. Checking your council tax bill for the correct rate can lead to significant savings as well.
By following these steps, individuals can embark on a successful financial reset in 2026, positioning themselves for a more stable and secure financial future.
