JANUARY 2026
Welcome to the Prosperity Advisors Financial Literacy Page!
“New year, New Me” is an expression that gets thrown around a lot this time of year. New Year Resolutions are a fun way to set goals for yourself for the year and start off the year on a good foot. While most people think about things like going to the gym or reducing fast food lunches, I think another important aspect is considering your financial goals, which can be broken down into two categories depending on where you are at in your financial journey: paying down debts and building up savings.
Before I get into specific strategies and goals to put in place, I think it is important to know how to set good goals. A good goal should be something you can do consistently and something that is achievable. You wouldn’t wake up one day and say, "I am going to run a marathon today!" Rather, you start small and prepare consistently over time - often by taking part in smaller events, such as 5k runs. The same thing applies to your financial goals. You want to slowly plan and build with short, achievable goals that put you in a healthy mindset and condition to tackle your long-term goals. Once you’ve established your achievable goals it is important to remain consistent; consistency builds discipline, and discipline becomes the habit that leads to change!
If you are just beginning your financial journey there is a chance you aren’t in the position to start saving. For example, you may need to dig your way out of debt first. Debt payoff strategies typically follow one of two approaches: debt snowball and debt avalance. Both involve paying the minimum payment on all debts, then taking excess cash flow and targeting down one debt at a time. The key difference between the two is which debt to tackle first. Snowballers focus on the smallest outstanding debt first with the hopes of getting it paid off to move its minimum to the next smallest, and so on and so on, creating a snowball effect that will eventually lead to all of the debts being paid off. This strategy works well if the payor feels a sense of pride when checking something off their list. "Avalanchers" instead think of where the debt hurts the most, tackling the higher interest rate debts first then addressing their low-interest rate debts down the line. This strategy may require more time to knock out your first debt source, but mathematically speaking, will be the strategy that pays off debt with the least out-of pocket-expense. And, it might be better suited to debtors that care about the hard numbers, not about the feeling of paying off a debt. Both strategies have their merits and require consistency of making monthly payments and focusing on how to properly manage those payments.
The other key aspect of financial goal setting is savings. Saving is often what people list at the bottom of their budget, they have what they make, what they spend, and then what is left over is labeled as “savings." But it rarely is actual savings. As a catch-all category, more often than not that is actually where unexpected expenses wind up, like a flat tire or a pricey birthday present. For this new year, I challenge you to list savings as an expense. When you buy food, you pay the store - when you save, you are paying your future self. A quick web search will tell you that you should be saving between 10-20% of your income, which is preferable, but not always realistic. Try assigning 5% of your monthly income to savings automatically, then let it ride for 3 months. If that proves to be a comfortable number for you, consider moving up to 10% for 6 months, then 15% for 6 months, assessing as you go, of course. If you still feel like you have extra cashflow then try to get yourself to 20%. As previously stated, you don’t want to jump straight to running a marathon until you prove you can run a few miles - so aim for that same behavior with both your savings and paying down existing debt.
Wishing you all a happy New Year, and good luck setting and meeting your financial goals in 2026. If you have any questions about what goals you should set, or how to meet goals you have already set, please reach out to your financial advisor.