Financial planning for the New Year

By Finbar Garcia LUTCF, FSS, MFA

Happy New Year my friends. So, you made it through 2025 with God’s grace and the many financial adjustments made along the way.

To move forward positively, we must first look back to where we were, and where we wanted to go. Did the financial adjustments make sense? Are you satisfied with where you are? Are you still on target with your goals or did you give up?

The answers to those questions depend on your commitment to achieving what you want. In planning for 2026, I suggest you measure your success based on where you were over the last three years with regard to your finances. Congratulations if you achieved your goals.

Let’s plan for 2026. List what you want to achieve, short-, medium-, and long-term goals; put the desired time horizons and cost. These can be items as simple as upgrading an appliance or electronic item at home to acquiring a major financial dream, like a new car or house. This way you will see your time horizons. They may be short term to long term, not necessarily to achieve in 2026.

Now the hardest part, budgeting to achieve these goals. Everyone should have a monthly budget using at least the 50:30:20 rule.

50 per cent towards your NEEDS: This will include mortgage or rent, all utilities, groceries, transportation, insurances, loan and credit card payments. If this area goes above 50 per cent, then it’s a sign that you are stretching your finances.

30 per cent towards your WANTS: This area will include eating out, entertainment, vacations, hobbies and upgrades. This area will keep you enjoying life while still staying disciplined. If you are above this per cent, then you need to pinpoint where you are spending the money.

20 per cent towards your SAVINGS: This is a crucial area and a very important one. It will include an emergency fund, retirement savings, investments and any extra loan payments beyond the minimum…like credit cards.

With this in mind, and those new goals you have for 2026 and beyond, the two main areas you can adjust are the ‘Wants’ and ‘Savings’.

If you find yourself eating out too often, and yes, this can be a huge part of your income, you may want to consider planning home-cooked meals and less eating out and entertainment.

Limit vacations to every two years if possible and revisit those hobbies. The idea is not to stop those activities, but to realign your new goals with your current income and expenses.

Pumping more money into your Savings area is where you will need additional focus. As I said earlier, based on your goals, there will be a cost.

A brand new car

So, let’s say it’s a short-term goal like a bigger and better television, that will cost you $7,200 in 12 months. You will need to divide that cost by 11 months, as the last month is when you want to buy the item, so you need to save $655 every month.

Cutting back on the ‘Wants’ area will allow you to save this extra cash to buy your new television. This is just one example of ‘Cutting back to Acquire.’

If your goals are medium to long term, then a different approach will be needed as to where to save the extra cash after cutting back. This is where you need additional financial advice based on your risk tolerance, as you will be looking for returns on these investments to better achieve the desired goal.

Let’s say your goal is a new vehicle or a new house, then the planning approach will be totally different. Your time horizons will be longer, your savings patterns will be more stringent, cutbacks and sacrifices will be demanding, but the outcome will be rewarding.

I will explain one example on a new vehicle. There are many car dealerships that are offering 100 per cent financing with up to eight or even nine years’ repayment plan. These are based on terms and conditions that must be strictly met before and during the agreement; in some cases there is no reduction nor savings for repaying the loan earlier. If you are going through your personal bankers, this process will be considered a vehicle loan. Some other dealers offer ‘Lease to Own’.

There are differences with each process, but the bottom-line, you must be able to repay your loan or lease commitment, so sacrifices and cutbacks are the biggest adjustments you need to make.

Do your homework: the longer the loan term, the lower the instalment but the higher the interest paid. You will need to decide which instalment period is comfortable for you. On the other hand, in the lease-to-own arrangement, the leasing company owns the vehicle. It’s only transferred to you after the total value on the agreement is fully paid.

The motor insurance may also be on the leasing company and your name, and they may even have tracking devices installed on the vehicle. This is to assist you in the event of vehicle theft or, if you reneged on your lease agreement, they will be able to locate the vehicle or repossess it, a financial loss to you.

Planning is not the issue—it’s the discipline, mindset and commitment that you need to focus on. It’s up to YOU to get what you want.

It won’t be easy, but it will be worth it…. Trust God.

Call me for more information on planning your financial future. Send your questions to myfinancialadvisor2020@gmail.com

or call 620-1185.