5 Finances to Fix in 2026

You're finally ready to ditch the side hustle and commit to your main gig as your primary source of income. But before you throw in the towel and bid adieu to freelancing, consulting, or selling stuff online, take a deep breath and review your finances. A careful evaluation can save you from a world of financial hurt and ensure a smooth transition to full-time employment.

Emergency Funds: The 3-6 Month Cushion

Avoid the rookie mistake of quitting your side hustle too soon. You need a safety net to fall back on, especially if your main job doesn't kick in right away. Aim for 3-6 months' worth of living expenses in a liquid, easily accessible savings account. This fund will cover your rent, utilities, food, and other essentials if your main job takes longer to pay off. If you're already in a financial emergency, consider using the Formly Expense Tracker to get a handle on your current expenses.

For instance, if your monthly expenses amount to $4,000, you'll need $12,000 to $24,000 in your emergency fund. It's not the most exciting task, but it's better to be over-prepared than under-prepared. Think of it as insurance against the unknown, like a financial parachute that opens just in case your main job doesn't materialize as quickly as you'd hoped.

High-Interest Debt: Tackling the High-Payoff Priorities

High-interest debt, such as credit card balances, can be a major obstacle to financial freedom. You can't afford to ignore it, especially if you're about to quit your side hustle. Consider using the Formly Debt Consolidation Calculator to identify the debt with the highest interest rates and prioritize those first. Paying off high-interest debt will free up more money in your budget for savings and investments.

Let's say you have $10,000 in credit card debt with an interest rate of 20%. If you pay the minimum payment each month, it'll take you 5 years to pay off the debt, and you'll end up paying a total of $24,000, including interest. That's a whopping $14,000 in interest charges alone. By focusing on the high-interest debt, you can save thousands of dollars in interest payments and get out of debt faster.

Savings Rate: Boosting Your Long-Term Prospects

While it's essential to have a cushion for emergencies, it's equally crucial to prioritize long-term savings. Aim to save at least 20% of your income towards retirement, a down payment on a house, or other long-term goals. If you're not sure where to start, use the Formly Savings Calculator to determine how much you need to save each month to reach your goals.

For example, if you earn $60,000 per year and want to save for retirement, aim to save 10% to 15% of your income, or $6,000 to $9,000 per year. That's $500 to $750 per month. By consistently saving a portion of your income, you'll build wealth over time and achieve your long-term goals.

Taxes: Minimizing the Bite

Taxes can be a sneaky expense that eats into your income. As you transition from a side hustle to a main job, review your tax strategy to ensure you're minimizing your tax liability. Consider consulting a tax professional or using tax software like TurboTax or H&R Block to optimize your tax strategy.

For instance, if you're self-employed, you may be able to deduct business expenses on your tax return. By carefully tracking your expenses and taking advantage of tax deductions, you can reduce your tax bill and keep more of your hard-earned money.

Health Insurance: Protecting Your Financial Future

Health insurance is a critical aspect of your financial well-being. As you transition to a main job, ensure you have adequate health insurance coverage. If you're currently self-insured or rely on your side hustle's benefits, you may need to purchase individual health insurance or explore other options.

Consider using the Formly Health Insurance Comparison Tool to compare plans and find the best option for your needs and budget. Don't skimp on health insurance – a medical emergency can quickly drain your finances and leave you in a precarious financial position.

The Bottom Line

Quitting your side hustle can be a liberating experience, but it's essential to have your finances in order before making the leap. By addressing the 5 finances to fix – emergency funds, high-interest debt, savings rate, taxes, and health insurance – you'll be better prepared for the transition and set yourself up for long-term financial success.

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