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Your financial action plan

4 steps to help you build a better financial future.

Taking action feels good

In these uncertain times, it can help to focus on the things you can control. Having a solid financial plan can help you save money, get out of debt, and be able to cope with setbacks.

It can also bring you closer to your long-term goals. These could include a trip of a lifetime, owning your own home, saving for further education, or a comfortable retirement

No matter what your financial situation looks like, you can make some positive changes. The key is to get started. Because these first few steps could be the beginning of a very different future.

Remember – if money worries are making you feel anxious – you're not alone. Support is available to help you get back on track and feel more confident. 

1. Create a budget and save where you can

Creating a budget is a vital step towards feeling in control of your finances. You could use our budget planner to help figure out where your money’s going – and where you could cut back.

Your goal with a budget is to have money left over each month to save or pay off debt. Even small changes can add up. For example, saving just £2 a day would give you £730 a year.

Not sure where to start? These questions might help:

When was the last time you reviewed your big costs?

For most people, their rent or mortgage is their biggest expense. To save money, you may consider moving to a cheaper rental property.

Or if you’re a homeowner, you may be able to switch your mortgage rate or remortgage to a new lender to find a better deal.

Make sure you check the costs of switching or remortgaging so you have the full picture before you commit.

Do you have expensive credit card debt?

Balance transfer credit cards, ideally with 0% interest, can be a good way to manage your debt and save you money. As long as you use your balance transfer credit card wisely. If you owe money on more than one card or have loans to repay, it can help to prioritise your debt. The faster you clear your debt, the less interest you'll pay. If you’d like help with managing debt or just need somebody to talk to, get in contact – there are lots of people here to support you.

Do you know how much your other bills are?

Utility bills, phone contracts, broadband, subscriptions, and memberships can all add up. By doing a little research, you may be able to switch providers to lower your monthly payments.

Are you a mindful shopper?

It’s easy to spend money on things we don’t need, especially online. Before you add an item to your basket, ask yourself if it’s essential or genuinely going to make you happy. You may be surprised how much money you can save by taking some time to think before you buy.

The secret to success with sticking to a budget is to be mindful of where your money goes. If you’re an HSBC customer, we have technology and tools you can use to help you manage your money.

Understanding your income and expenses can reduce your stress – and help you spend less than you earn. Making a note of when bills need to be paid and setting up Direct Debits can help you be prepared. You may also want to try putting money aside each month to cover yearly bills, such as home insurance, tax, or MOTs.

Use our financial fitness tool to help you set achievable goals and plot your progress.

2. Start an emergency fund

As you begin to save money each month, you can use it to build up some reserves. This way, if you’re faced with an unexpected bill, you’re more likely to have money spare rather than needing to borrow.

It’s a good idea to have 3 to 6 months’ worth of living costs saved up for your emergency fund. It can take some time to get there, and that’s OK. If you want to create a timeline to work towards, you can use our emergency fund calculator to help see how long it may take you to reach your goal.

These saving tips may also help you start building up your savings:

  • Save your cash in an instant-access account so you can withdraw it if you need to
  • Transfer money into your savings account on the day you're paid
  • Set up a standing order so the money gets moved automatically
  • Add any extra money you’ve got spare at the end of the month
  • Postpone the luxury purchases until your emergency fund is in place

Having cash on hand as a buffer – no matter how much money you earn or whether you have debt – has been linked to an increase in life satisfaction and feeling more financially secure.

Explore: Different types of savings accounts

3. Protect the things that matter

An emergency fund is great for short-term emergencies. But if something terrible or unexpected were to happen – and sadly, we all know cases where it has – an emergency fund will only go so far.

For example, if you have people who depend on you financially – a partner, children, or perhaps an ageing relative – it may be worth considering life insurance to support your loved ones for years to come.

Having insurance in place can protect the things that matter to you. Not just your family – but also your pets, home, business, or belongings. It can also protect your income and any savings you have, by providing a safety net to help you pay for unexpected expenses.   

Explore: Insurance to protect what matters to you

4. Invest in your future

If you’ve managed to save money, pay off debt, and build up an emergency fund – great work. You're in a stronger position than many people. And this is the ideal place to start looking to the future to help make your long-term goals happen.

So, how can you make your hard-earned cash work harder? 

Don't ignore your pension!

Pensions offer tax advantages over other forms of savings. If you’re enrolled in a workplace pension or have chosen to take advantage of your employer’s scheme, you’ll already be benefitting. That’s because both you and your employer will be paying into your pension.

If you’re lucky, your employer may encourage you to pay more than the minimum by matching your contributions. If so, whatever extra you put in, they’ll contribute the same, up to a certain amount. This is effectively ‘free’ money. So, if this benefit is available to you, consider contributing as much as you can.

Have a play with our retirement calculator to work out what kind of lifestyle you’d like in retirement and whether you’re on track to get there.

Explore: Retirement tools and guides

Consider investing

Investing gives you the potential to make more money that you would from a savings account.
stocks & shares ISA is a tax-efficient way to invest in things like shares and funds. This means you won’t pay any UK income tax or capital gains tax on the returns you receive, although there is a limit to how much you can put into an ISA each tax year.
Investing should be seen as a long-term commitment, meaning you should be prepared to invest for at least 5 years – although you can always access your money if you need to. 

Is investing worth this risk? That’s for you to decide. But investing may cost less than you think, so you could start small and see how you go. Keep in mind – the value of investments can fall as well as rise, and you may not get back what you invest.  

When you’re ready to dip your toe in the water, you can choose a fund and start investing with £50. As you’d expect, eligibility criteria and some fees apply.

Explore: New to investing

Key takeaway

Getting on top of your finances and saving for the future can take time. There will be days when you go over budget – but that’s fine. Life happens. Try and review your action plan regularly to help you keep on track. And enjoy the journey to a better financial future.