6 Things You Must Do Before 2026 (Financially)

Summary

This video walks viewers through a step-by-step year-end “money reset” designed to help them start the new year financially strong. Nisha, a former investment banker, shares six key actions: reviewing your annual income and spending with a ‘money wrapped,’ auditing subscriptions and major bills, rebuilding your financial foundation, maximizing employer and tax benefits, setting clear financial goals, and creating an automated money system that supports consistent habits. The guide emphasizes awareness, simplicity, and automation so your finances work quietly in the background, helping you feel organized, confident, and in control heading into the new year.

Takeaways

• 😀 Start the new year with a financial reset by reviewing your spending, income, and savings from the previous year.
• 😀 Conduct a 'money wrap' by breaking down your income, expenses, and surplus/deficit to understand your financial habits.
• 😀 Treat your savings and investments as part of your spending to get a more accurate picture of your surplus.
• 😀 Analyze your spending patterns, like spending more during certain seasons (e.g., winter holidays or summer festivals), to gain better financial awareness.
• 😀 Perform a yearly audit of recurring subscriptions and memberships to cancel anything you no longer use.
• 😀 Use comparison websites annually to check if you can save money on big bills, such as car insurance or broadband.
• 😀 Ensure your emergency fund covers 3-6 months of expenses and top it off if your living costs have increased.
• 😀 Keep a balance between cash savings and investments. Invest any excess cash that's not part of your emergency fund to combat inflation.
• 😀 Maximize your employer benefits, like contributing enough to your retirement plan to receive the full employer match (free money!).
• 😀 Use up your tax-free allowances and take advantage of tax-saving strategies like tax loss harvesting and charitable donations before the year ends.
• 😀 Set clear financial goals for the next year, such as saving for a house or paying off debt, and track progress through specific monthly targets.

Q & A

What is the 'Money Wrapped' exercise and how does it work?

The 'Money Wrapped' exercise is a year-end financial review, similar to Spotify's 'Wrapped' feature. It involves reviewing your income, expenses, and surplus/deficit over the past year. The goal is to identify spending habits, track where your money went, and understand whether you spent more or less than you earned. This exercise helps you gain financial awareness and discover potential areas for improvement.

Why is it important to include savings and investments as part of your spending in the 'Money Wrapped' exercise?

Including savings and investments as part of your spending in the 'Money Wrapped' exercise provides a clearer picture of your financial situation. By treating them as expenses, you can better assess if you truly had money left over (a surplus) or if you were just counting money already saved or invested. This helps you understand your untapped financial potential.

How can you spot spending patterns during the year through this exercise?

By looking at your year-end financial snapshot, you can spot patterns in your spending. For example, you might notice that you spend more in certain seasons (e.g., winter or summer) or on specific categories (e.g., entertainment, holidays). Identifying these patterns helps you connect your emotions and habits to your financial decisions, improving your control over future spending.

What is a 'yearly audit' and why is it necessary?

A yearly audit involves reviewing all recurring payments and subscriptions to ensure you are only paying for services you actually use. This includes things like streaming services, gym memberships, or unused apps. By cancelling or pausing unnecessary subscriptions, you can save money and avoid unwanted financial leaks.

What is the one-year rule for comparing insurance rates, and how does it help you save money?

The one-year rule means comparing your insurance rates annually to ensure you're not overpaying. Many insurance companies gradually increase their rates, betting that customers won't switch providers. By checking for better offers every year, you can often save money by securing cheaper rates.

Why is it important to rebuild your financial foundation, particularly your emergency fund, before the year ends?

Rebuilding your financial foundation, particularly your emergency fund, ensures you're prepared for unforeseen expenses. If your income or expenses have changed throughout the year, your emergency fund may no longer cover 3 to 6 months of living costs. By topping it up, you safeguard your financial stability.

How should you balance cash savings and investments to protect against inflation and financial emergencies?

The key is to have enough cash savings to cover emergencies but avoid holding excessive cash that loses value due to inflation. Any cash beyond your emergency fund, especially money you won’t need in the next 5 years, should ideally be invested to generate better returns than a savings account.

What are some examples of 'free money' you might be leaving on the table, and how can you claim it?

Free money refers to opportunities you might be overlooking, such as employer retirement matches, tax-free allowances, or tax-loss harvesting. For example, contributing enough to your employer's retirement plan to get the full match is free money. Similarly, using up your tax-free allowance before it resets at the end of the year can save you money.

How do you set specific financial goals for the next year to ensure progress?

To set specific financial goals, focus on something measurable and actionable, such as saving for a house deposit or paying off a credit card. Break it down into monthly targets (e.g., saving $500 a month for a $6,000 goal by December 2026). By setting clear, numerical goals, you can track your progress and adjust your strategy if needed.

What is a 'money operating system,' and how does it help with consistent financial management?

A money operating system automates your financial processes to make managing your money easier. This includes setting up automatic transfers for savings and investments, scheduling bill payments, and automating contributions to savings pots. By reducing the need for decision-making and ensuring consistent actions, this system helps you stay on track with your financial goals, even when life gets busy.