It’s the time of year where optimism is running high. We don’t need to be the person we were last year, we can be a shiny new version of ourselves, who is good with money and on track in every corner of our finances. Sadly, our positive outlook doesn’t always last, but with 63% of people making financial resolutions this year, it’s a chance to turn things around.

The key is to make the right resolutions, so here are a few tips to help you make the most of your money in 2026.

The problems that you know about already will spring to mind first.

Research by Hargreaves Lansdown revealed that renters, for example, are the most likely to say they want to spend less – and 23% of them said this was one of their resolutions for 2026. We know rental incomes are more stretched than any others, and on average they have £39 left at the end of the month, so it’s easy to see why they want to cut back.

However, they also struggle in all sorts of areas of their finances. So, for example, fewer than a third are on track with their pension. However, only 11% of them say they want to boost their pension this year.

Read more: The cost of staying loyal to your high street bank

It shows that your first resolution should always be to get a better picture of your overall finances – including using a pensions calculator to see whether you’re on track for retirement.

It’s only when you have a full picture that you can see what you need to prioritise.

Drawing up a budget is boring, and it may not feel like you’re achieving anything, but, like digging the foundations of a building, if you want to build something robust you can’t skip this step.

Make a list of everything coming in and everything you’re spending. Your current account app and the apps of the companies you pay bills to will have the details you need, and a budgeting app makes it easy to plug all the details in.

From there, consider where you can cut back to free up a chunk of money every month to fund your resolutions.

Younger people, aged 18-34, are particularly likely to fall into this trap. The research showed that 40% wanted to save more, 22% to get on top of their finances, 21% to spend less, 19% to pay more into investments, 19% to start investing, 15% to pay off debts and 14% to put more into their pension.

Given that at the start of your career, money tends to be tighter anyway, there’s a real risk that by trying to do so much, you might fall short on all fronts.

It helps to set yourself one realistic goal at a time.

BIRMINGHAM, Ala. (WBRC) – With the new year quickly approaching many people are looking for ways to get their finances back on track. Financial expert Jim Sumpter says the first step is to review your budget, understand what you’re earning and spending, and rebuild any emergency savings used over the holidays. He also warns about hidden costs like forgotten subscriptions or missed gift return deadlines, which can quickly add up.

When it comes to saving, Sumpter recommends starting small. Even an extra $50 per paycheck or skipping one dinner out a month can add up to over $1,000 in a year. Tackling credit card debt doesn’t have to be overwhelming either — focus on one card at a time and make consistent extra payments.

The key, Sumpter emphasizes, is building habits over time. “Start small, create a habit, do something for 30 days, then another 30, and another 30,” he says. By spring, these habits become second nature, making saving, budgeting, and paying off debt much easier. Small, consistent steps now can set you up for a financially stronger year ahead.

Get news alerts in the Apple App Store and Google Play Store or subscribe to our email newsletter here.

Copyright 2025 WBRC. All rights reserved.

Americans who are receiving a year-end bonus for a job well done may be sorely disappointed when they open their envelope to find a big chunk missing.

Up to a third of a cash bonus can get swallowed up by the IRS’ special tax withholding on cash bonuses, or what it calls “supplemental income,” on top of Medicare, Social Security and state taxes. The federal flat rate for bonus pay is 22% for supplemental income under $1 million. Add Social Security (6.2%), Medicare (1.45%), and state taxes, and total withholding is roughly 30%-35%.

“That 22% federal withholding might be higher than your…regular tax bracket,” according to workforce management software company Homebase. “If they usually pay 12%, seeing 22% disappear from their bonus stings.”

Why can this spell financial disaster for Americans?

For the holidays, many Americans may have spent like they were receiving the full amount of the bonus instead of the bonus amount minus taxes, said Kevin Knull, chief executive of TaxStatus, which provides IRS data to financial advisers.

The $10,000 bonus for air traffic controllers who had perfect attendance during the government shutdown isn’t really a $10,000 bonus, for instance. The withholding on bonuses is a flat 22%, plus a 6.2% Social Security tax and 1.45% Medicare tax. Those reduce the bonus to just over $7,000, and you may still have to have state income tax taken out.

“That’s all immediately deducted and goes to Uncle Sam,” Knull said. “Somewhere around 48% of the population underestimate what they pay in taxes. Income taxes take a big bite out of paychecks.” If you spent the entire ‘$10,000 bonus,’ you overspent by about $3,000.

Separately, Americans should be aware that a bonus can also bump them into the next higher tax bracket if they’re already close to it, experts said.

Some (belated) good news?

If the tax cost of your bonus is less than 22%, or the withholding rate, you’ll receive a tax refund for the difference, or it will be applied to the tax due on any other income, experts said. Bonuses will be taxed as regular income on the final tax return. You’ll just have to wait until you file your 2025 taxes next year to get the money back.

On the flipside, if the tax cost of your bonus is more than the 22% withholding rate, you’ll owe the difference between what was withheld and your total tax cost.

How can you keep taxes low with your bonus?

If you haven’t maximized your 401(k) or IRA contributions for the year, consider adding some of the money to your retirement fund to reduce overall taxable income come tax season, wrote Kay Bell at financial products comparison site Bankrate. Contrbutions are income tax-free, but withdrawals later are taxed.

The 2025 IRA contribution limit is $7,000, or $8,000 if you’re age 50 or older. The 401(k) limit is $23,500 and an additional $7,500 for age 50 or older except those who are age 60 to 63. Those individuals have a higher catch-up contribution limit of $11,250 instead of $7,500.

Or if you expect your income to be much lower next year, pushing your tax bracket lower, consider asking your employer to defer the bonus until then, she said. You’ll still owe taxes, but you could save money by paying at a lower tax rate.

“However, even if your tax bracket doesn’t change year to year, some like receiving bonuses next year just to move the tax liability to 2026,” said Richard Pon, certified public accountant in San Francisco.

What about non-cash bonuses or gifts?

“Employers and employees may be shocked that gifts are usually taxable,” Pon said.

Cash and cash-equivalent gifts and bonuses such as gift cards, season tickets to sporting or theatrical events and gift certificates are taxed, Pon said.

“Sometimes employers deduct this from the regular paycheck,” he said. “Other times, employers pay these taxes on your behalf and gross up the income, which can double the cost of a $25 gift card to $50 with taxes if an employer pays the employee share of taxes…you should check your paystub to see if you are taxed.”

A couple of exceptions exist. The first is the “conduit gift,” which is a contribution made to an intermediary organization that then passes the funds to the final intended recipient. For example, if the parent teacher association (PTA) collected and gifted cash or gift cards to staff and faculty, those are conduit gifts and wouldn’t be taxed. The PTA was merely a conduit for gifts paid by parents.

Another exception is if a manager personally gives an employee a cash gift or gift card, Pon said. “That is a personal gift. It’s not a gift from your employer,” he said. Since the manager is “not the employer, those would be tax-free gifts to the recipients.”

He warned though those gifts may cause other frictions at work. “There are a lot of scrooges,” Pon said. “I once worked in an accounting firm and the managing partner complained I was giving gift cards and candy to our admin staff as a token of appreciation of helping me all year. The partner said I was making other managers seem unkind if they didn’t give out gifts.”

Noncash gifts like hams, turkeys, an occasional ticket to a sporting event or theatrical event are considered a “de minimis fringe benefit,” which is not taxable, Pon said. But note, a coupon or gift card intended to buy a turkey, ham or other item may be taxable, he said.

Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.