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What is financial planning?

Financial planning is exactly as it sounds – it’s planning your finances.

It’s an ongoing process which can help you achieve any long-term goals you may have, such as planning for retirement, while still supporting your short-term needs. 

Personal financial planning can help you achieve goals, lower stress and manage your money. But it’s often the last thing on our minds.

Here, we look at:

Why aren’t we planning ahead?

The benefits of financial planning

How does financial planning work?

Financial planning tools

Why aren’t we planning ahead?

It’s our human nature to want everything now

When it comes to our finances, it’s so tempting to have it all today – we just can’t seem to help ourselves. Get the reward now rather than later. Choose immediate gratification over long-term satisfaction. It’s how we’re wired. 

And as much as we can try to evolve to think more long-term, there are also the cultural influences to consider. 

Temptation to spend is everywhere

Millennials are a good example of a ‘have it now’ generation. Born between 1980 and 2000, they are the first generation of digital natives, with access to all the information they need.

On one hand, they have a world of financial information, education and advice at their fingertips. And on the other, they may feel pressure to compare and compete with what they see on social media: 

  • better holidays
  • smarter mobiles
  • designer clothes
  • cosmetic tweaks
  • faster gaming

Following the global financial crisis – a time of low wages and very low interest rates – it’s easy to see how this generation could be swayed to spend, rather than save. And they’re not the only ones.

Our excuses hold us back, financially

It’s not a lack of education, information or professional advice that holds us back – it’s us. 

We find it difficult to share our thoughts and worries about money. It’s easy to lose perspective and develop a skewed view of our finances. For example, you may feel:

  • ashamed – believing your friends are richer, happier and more successful than you are
  • disconnected – thinking investing for the future is something other people do
  • afraid of change – finding new opportunities more threatening than exciting

It can be easier to believe our own excuses rather than change the way we think. 

The benefits of financial planning

It’s good to talk. There are many benefits that come with talking about money, engaging with your long-term finances and planning your financial future. And we’re not just talking financial benefits, there are personal wellbeing benefits too. 

It can help you:

Achieve your goals

Once you stop worrying about keeping up with everyone else’s life goals, you can focus on your own. From holiday adventures to a new business endeavour – once you know what you want, you can put a financial plan in place to make it happen.

Reduce stress and anxiety

When you bottle something up, it can cause a lot of stress and anxiety over time. Especially, when it’s to do with your finances. Many people feel this way – you’re not alone

No matter what your financial situation looks like, support is available. And talking to someone you trust can help you take action and feel more confident.

Learn from others

There are all sorts of saving and investing tips out there. The more you talk about money matters, the more opportunities you’ll have to share with, and learn from, others.

Talking of investing, we know it isn’t for everyone. There are fees involved and you may not get back what you put in. Yet despite that, it could also give your money its best potential to grow. If you know anyone who invests, why not ask them how they got started?

Explore: New to investing

How does financial planning work?

Personal financial planning works by creating a step-by-step guide to manage your money and reach your financial goals. It can help you identify where you want to be in life with regards to your money, and how you can potentially get there.

Financial planning could help you feel more in control of your income and outgoings, as well as any investments you may have. 

A financial health check can give you a view of your finances, and see where you could potentially make changes.

Financial planning tools

Not sure where to begin? Don’t worry, here are a few ways you can  start putting plans in place:

1. Use online calculators to work out your options

Easy to access and free to use, you’ll find online calculators for everything, from savings and investments to interest rates and retirement planning.

Great for: quickly working out your options.

Top tip: try our investment calculator to see your money’s investment potential.

2. Create your own financial action plan

Creating an action plan can make your financial life clearer and simpler. It will help you work out what your money is doing for you right now, and how you could make it work harder for you in the future.

Great for: serious peace of mind.

Top tip: whether you’re in your 20s or 60s, find out what you can be doing now to give yourself a head start.

3. Get some financial advice

If you’re not sure how and where to invest your money, a trusted financial adviser could be a great place to start. With HSBC, financial advice is available if you have £100,000 or more in savings or investments. Fees apply.

Great for: confidence and support.

Top tip: with HSBC, there's no obligation to invest. Once you've received our advice, you don't have to take it.