“Didn't see you at the gym this morning!”

That was called out to me when I arrived at work on 2 January, at the beginning of this bright and promising new year. Clearly, we're all expected to be starting the year at full pace.

The calendar has a habit of giving us a firm push at the start of January. We want to do better, particularly when it comes to our health and our finances.

There are good reasons to take a closer look at household finances this year here in Iceland. Inflation and interest rates are still causing problems, while unemployment has risen. Looking back can bring a certain amount of disappointment or regret, but the new year can also give us the motivation to make better choices over the months ahead.

That's why New Year's resolutions remain so popular. But choosing a goal isn't enough. To make real progress, we need a sensible plan. Otherwise, the resolution may remain untouched all year, rather like a Christmas present from the in-laws that never made it out of its packaging.

There are good reasons to act

This time, we're going to do it properly.

There are warning signs in the economy, in business and in the personal finances of many Icelandic households.

It makes sense to create more breathing room in the household budget and prepare for the possibility that out personal circumstances or the economy might take a turn for the worse.

Here are five common financial resolutions and, more importantly, some practical ways to keep them.

1. Automate your savings before you spend the money

Saving more is usually close to the top of any list of popular financial resolutions. When times become less certain, access to savings becomes even more important.

It's an excellent goal for 2026. It's also one of the easiest resolutions to put into practice, provided you take the first step and stick with it.

How to do it

• Decide what you're saving for, how much you'll need and when you'll need the money.

• You might be saving for Christmas, a holiday, home maintenance, education, a deposit on a home, or the replacement of a car, phone or household appliance.

• Open a separate savings account for each goal. You can open as many savings accounts in Iceland as you wish for free..

• Give each account a clear name. “Christmas 2026” is far more useful than “Savings Account 4”.

• Use a savings calculator to work out how much you need to put aside.

• If Christmas costs you ISK 120,000 each year, for example, you'll need to save ISK 10,000 a month.

• Set up an automatic monthly transfer from your current account to your savings accounts. You can do that in most bank apps or using your online bank.

• This is the most important part. You're far more likely to keep saving when the money moves automatically, before you get the chance to spend it.

2. Get a proper grip on your spending

Could you make better use of your income?

Why didn't your finances improve as much as you'd hoped last year? Perhaps the problem wasn't your income. It may have been that you didn't have a clear enough picture of where the money was going.

One of the first lessons children learn about money is the difference between things we need and things we'd simply like to have.

Adults understand this distinction too, of course. Still, when we're busy managing work, family life and the everyday running of a household, it's easy to stop paying attention. As long as we reach the end of the month without serious difficulty, spending can drift along without much scrutiny.

This year, let's do better.

How to do it

• Review all your spending from the previous year and divide it into categories.

• Banking apps and services such as Meniga can help. It's difficult to improve anything until you know what you're trying to change.

• Create a new household budget in which your income is assigned a purpose in advance.

• Start with fixed household costs. Then decide how much you plan to spend on groceries, entertainment, leisure activities and personal expenses such as clothing and haircuts.

• Don't forget the less frequent costs that are easy to overlook.

• Update your budget every month.

• You can use a spreadsheet, a budgeting app or a household budget template. The method matters less than the habit. What counts is looking at the figures regularly and adjusting your decisions when needed.

3. Use the 24-hour rule to stop impulse purchases

The Swedish newspaper Aftonbladet has recommended waiting 24 hours before deciding whether to buy a product or service.

It's a simple and well tested approach. I regularly hear from people who use it to cut down on impulse purchases and keep their spending under control.

The idea always reminds me of a conversation I once had with a footballer who had played under manager Bob Paisley at Liverpool.

Paisley had a clear rule. Players weren't allowed to complain about playing time, substitutions or anything else on match day. He needed to focus on the game.

“Write it on a piece of paper and bring it to training tomorrow, so we don't forget to discuss it,” he would tell them.

It was an effective way to take the heat out of the dressing room.

The player told me that he had written plenty of those notes, but he had never handed one over. By the following morning, the anger and frustration had usually disappeared.

The same thing often happens when we postpone a purchase. The excitement fades, and something that felt essential yesterday suddenly looks unnecessary.

How to do it

I'm not talking about medication, groceries or other genuine necessities.

The rule is for purchases that wouldn't fall into the essential category in your household budget. Promise yourself that you'll wait at least 24 hours before buying them.

See a beautiful coat at Kringlan shopping centre? Try it on. Turn around in front of the mirror. Smile at the person serving you and say, “Thank you. I'm going to think about it.”

The same applies online.

Save the item to your favourites or put it in your basket, but don't complete the purchase. Return to the website or app the following day, after you've slept on the decision.

You may still want it. That's fine.

But at least you'll be making a considered choice rather than reacting to a passing impulse.

4. Pay down your debt

Reducing debt appears on almost every list of financial resolutions, and with good reason.

Paying down debt is one of the clearest ways to improve household finances. The benefit is immediate and easy to measure. It can save you interest, carries very little risk and doesn't require specialist knowledge.

A worthwhile resolution for 2026 is therefore quite simple: aim to be in a noticeably better debt position by the end of the year.

How to do it

A resolution is of little value when it depends on constant willpower.

The best approach is usually to make higher repayments as automatic as possible. One option is to ask your lender to shorten the term of your loan. Your regular payments will rise, but the balance will fall more quickly.

It can also help to secure an early win.

This is one reason the debt snowball method has worked well for many people. You begin by putting as much as possible towards your smallest debt, while continuing to make the required payments on everything else.

Once the smallest debt has been cleared, you take the amount you were paying towards it and add it to the payment on the next-smallest debt.

Then you repeat the process.

The amount available for repayments gradually grows, like a snowball rolling downhill. Just as importantly, clearing the first debt gives you a visible result and a reason to continue.

5. Review your pension and choose what suits you

Financial advice from other countries often recommends increasing pension contributions. That advice may be perfectly reasonable, but pension systems differ greatly from one country to another.

The choices available abroad can be very different from those offered in Iceland.

Pensions involve some of the largest sums of money most of us will ever accumulate. It's worth taking the time to understand where you stand.

• Are you contributing 4% of your salary to supplementary pension savings (is: Viðbótarlífeyrissparnaður)?

• Should you choose specified private pension savings, known in Icelandic as tilgreind séreign?

• Are you allowed to choose your pension fund? If so, do you have enough information to decide which fund is right for you?

• Do you know what retirement income you're currently on course to receive, both from your pension rights and from private savings?

Online course

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How to do it

Sign in to your pension fund's website and review your position.

You should normally be able to see an estimate of your future pension rights, along with an overview of the rights you've built up across different pension funds.

You should also review your supplementary pension savings. Check how much you've accumulated, where the money is invested and whether the investment option still suits your circumstances.

There is a wide range of information about the Icelandic pension system in the pensions section of my website. Much of it is still in Icelandic but an effort is being made to translate much of it into English. Take the time to learn enough about your pension to answer these questions:

• Am I building up supplementary pension savings in a way that suits me?

• If I can choose my pension fund, am I in the fund that suits me best?

• Is my pension invested in the most suitable investment option?

• Do I need additional private pension savings or insurance?

• Do I have a realistic idea of the income I can expect later in life, and will it be enough?

You may also have been contacted by salespeople offering pension-related savings products or insurance. These products need to be considered carefully, as are all investment or pension products being sold by people who stand to benefit from the sale.

Well, that's about it. I hope you will have a wonderful 2026!