Ready to make 2026 the year you have a financial glow-up?
Good habits can take time to become routine – especially when they involve money – but a new year is the perfect opportunity to make a fresh financial start.
From using credit instead of cash to splurging your savings, here are five bad financial habits you should break in 2026 (and what you should do instead):
1. Living beyond your means
We all spend more than planned sometimes, but if you can’t remember the last month you weren’t in your overdraft, you could be living beyond your means. The key to breaking this bad habit is to simply spend less than you earn. It sounds easier said than done, but by cutting back on non-essentials, you could free up some serious cash. For example, if you love going out for dinner, try batch cooking instead, and if you have to have the latest gadget, try waiting until your current model is on its last legs instead. This will not only reduce financial stress but also allow you to start building a safety net for those all-important financial emergencies.
2. Using credit cards for everything
Credit cards can be a flexible way to pay for unexpected expenses and even help you build a positive credit history, but overuse can cause some serious financial problems. It also signals to lenders that you’re reliant on credit, which could prevent you from being approved for a loan, mortgage, phone contract, or bank account. To avoid overspending on credit cards, make a plan to pay off all your current accounts and only use them for certain purchases going forward. Withdrawing cash for regular expenses, such as the weekly food shop or filling up your car, can also help you reduce your credit card usage and stick to a budget. It’s a win-win!
3. Dipping into your savings
Whether you have £10 or £10,000 saved, using this money for non-emergency expenses can be a slippery slope. As well as eroding your emergency fund, it can also lead to you falling into debt if your paycheck isn’t enough to cover an unexpected expense on top of your monthly outgoings. Let’s say your car was to break down tomorrow. Could you afford to get it fixed right away, or would you need to get a loan to cover the cost? Adding to your savings each month (and leaving it alone) can be the difference between staying debt-free and being stuck in a never-ending cycle of borrowing and repaying.
4. Emotional spending
Do you find you spend more when your emotions are heightened? You’re not alone. According to Moneyboat, 27% of people in the UK admit to shopping more than once a month to improve their mood when they’re feeling lonely, stressed, or burnt out. But with 25% of people also admitting to regretting a purchase they made under stress, it can lead to feelings of remorse and guilt. One of the most common tactics to overcome emotional spending is the 24-hour rule. In other words, whenever you get the urge to emotionally spend, wait a day and re-evaluate whether you actually want or need it. In most cases, your emotions will have subsided, and you’ll no longer be tempted to splash the cash.
5. Avoiding your finances
We’re all guilty of avoiding our bank account in the final few days before payday, especially if it’s been a particularly busy month. However, if you’ve made a habit of avoiding every aspect of your finances, the true extent of your money worries could be worse than you think. Whether it’s conversations about money or addressing your debt, burying your head in the sand might feel safer than facing the truth, but it will only make the situation worse in the long run. Start by getting a full picture of your finances, including all outstanding debts. Then, when you’re ready to do something about it, map out a plan of action. This might sound overwhelming right now, but breaking the process down into smaller steps can make it seem much more achievable and allow you to celebrate each small win along the way.
