The start of a new year is a natural time to reset our financial habits. And after a year marked by sticky inflation, slower than expected cuts to UK interest rates, and market volatility, investors have more reason than ever to engage with their money.
Charlene Young, senior pensions and savings expert at AJ Bell, has come up with five practical New Year’s resolutions to help investors get their finances fighting fit for 2026.
- Check on your emergency fund
“AJ Bell research highlighted that one-in-five Brits have less than £1,000 saved in an emergency cash pot*. This tallies with data earlier this year from the Financial Conduct Authority that found 21% of people have less than £1,000 they could draw on in case of emergency and 10% have nothing saved at all.
“Most people should aim to have at least three months’ worth of essential expenses in an easy to access pot to help you through any financial shocks. Some people might want up to six months – this could be the case if you have a variable income or have people who are financially dependent on you.
“Essential expenses generally include rent or mortgage payments, bills, food, transport and insurance, but not luxuries and holidays.”
Tip: Whatever amount you choose, the most important thing is that the cash is easily accessible for you to get your hands on.
*Source: AJ Bell/Opinium. Based on a nationally representative online survey of 4,000 UK adults carried out between 7 and 14 October 2025.
- Make the most of your tax-free ISA allowance
“Anyone can put up to £20,000 a year into an ISA which you can split amongst the different types of account. On top of this, anyone with children can open a Junior ISA and put up to £9,000 a year into it. These accounts are designed to shield money from the taxman, although keep in mind that money in Junior ISAs cannot be accessed until the child turns 18.
“The allowances for investment gains and income have been slashed in recent years, and income tax rates for savings interest and investment income are also going up. Starting from April 2026, the basic and higher rates of dividend tax will be increased by two percentage points to 10.75% and 35.75% respectively. The additional rate will remain at 39.35%.
“Rates of tax on savings interest will then follow in April 2027. All three rates will get a two percentage point hike, meaning interest earned above the personal savings allowance will suffer tax at 22%, 42% or 47%.
“The capital gains tax (CGT) allowance now stands at £3,000 for the tax year – compared to £12,300 a few years ago. This allowance is the gain you can make when you sell or transfer an investment not already in an ISA or pension without paying CGT. The lower rate of capital gains tax, paid by basic-rate taxpayers with profits over the annual limit, is now 18%, while the higher rate for gains now stands at 24%.
“Likewise, the tax-free dividend allowance gives investors just £500 in dividend income tax-free a year, compared to £5,000 back in 2016. Such a low allowance means that even investors with smaller amounts need to think about protecting their investments from the taxman. HMRC expects to rake in £18.6 billion in dividend tax in the current year – with the number of people paying income tax on dividends more than doubling in the last five years.
“Wrapping your investments up in a tax-free account is more important than ever if you’ve got ISA allowance to spare. As well as paying in new cash, you can also move money into your ISA using a process called a ‘Bed and ISA.’ This is where you sell an investment in your dealing account and buy it back in your ISA, so that it’s protected from tax in the future.”
Tip: You don’t need to invest a lump sum on 6 April – monthly contributions can help build consistent habits as well as dampening the effect of market movements.
- Round up your pensions
“Auto-enrolment has successfully boosted the number of workplace pension savers, but it’s also easy to end up with more pots than you can keep track of. Even if you already know where your old pensions are, it’s a good idea to see how they are doing and think about combining them. Combining your old pensions can simplify your retirement planning and might end up saving you hundreds, if not thousands, of pounds in the long run.
“Tracking down your pensions also puts you in the driving seat to make better decisions about your future. This could include helping determine whether you need to pay in more now or simply reduce your costs to help boost your pot in the long term. Different pension companies charge different amounts for managing and investing pensions. Combining your pensions can help you choose the right priced plan for your needs, and reducing charges can mean you keep more of your returns over time.
“The impact of reducing your pension charges can be significant over the long term. AJ Bell figures show that someone combining three pensions with charges of 1.5% to 0.75% could boost their pension pot by more than £7,000 over 10 years or £20,000 over 20 years if they were to switch to a single, lower cost account.
“Many providers also have in-house pension finding tools, such as AJ Bell’s ‘ready-made pension’ service, which allows people to find their pensions for free as well as giving them the option to combine them into a ready-made pension account in one go.”
Tip: Check your pension statements to see exactly what you are paying and whether any of your existing plans have special features or guarantees.
- Automate your investing
“Many people believe that you need a huge stash of cash to start investing. But you can start with small monthly amounts and build up your investments over many years. Besides the obvious financial barrier to investing a big lump sum in one go, it can feel quite daunting if you’re just starting out.
“Using a regular investment service automates things for you and removes the worry about remembering to invest each month.
“But perhaps the biggest win of automatic or regular investing is that you’ll avoid trying to time the market. Many investors miss out on market gains because they’re waiting for the ideal time to invest, but regular investing gives you a structure you can stick to. This could prove especially helpful when keeping impulses in check around dips and peaks in the market. Remember the old investment adage: ‘time in the market beats timing the market.’
“Drip-feeding money into investments regularly can, on average, benefit your returns over the long term. Known as ‘pound-cost averaging’, it means that because you’re buying at different times, when markets may have risen or fallen, you’ll end up smoothing out the ups and downs of the market over time.”
Tip: Many investment platforms offer reduced dealing charges for their regular investment services, as well as automating the process for you.
- Write a will
“It’s not the most glamorous New Year’s task, but it matters. According to research from the Money and Pensions Service, over half of UK adults do not have a will in place, which means they haven’t had a say in what happens to their wealth when they die. Lots of people also wrongly assume their assets will automatically pass to different people when they die, so it’s crucial to ensure your affairs are in order and your wishes are known.
“For example, if you’re not married then your partner won’t automatically inherit any of your estate when you die, regardless of how long you’ve been together. It’s particularly key to bear this in mind if you own the home that your partner, and potentially stepchildren, live in. With blended families being more common and people co-habiting but not being married, it’s essential your money and assets are going where you want them to.
“Many people mistakenly believe that pensions are covered by the wishes in their will. But most pensions are written under trust, meaning they sit outside of your estate and your will. You can nominate whoever you like to receive a share of your pension directly with your provider, but these nominations must be kept up to date.”
Tip: Whilst the DIY route might seem tempting for your will, you need to make sure it is legally binding, otherwise your efforts will be in vain. Using a professional solicitor could help you ensure your wishes are correctly documented and avoid extra cost and stress for your loved ones.
