Financial Planning - Your Savings Action Plan

HSBC UK
Wealth
Planning
Financial action plan

Taking action feels good

In these uncertain times, it can help to focus on the things you can control. And working out what your money’s doing for you now and where it might come from in future can give you real peace of mind.

Our financial action plan gives ideas and tips to make your financial life simpler and clearer, and give you more confidence.

We’ve broken it down into a series of actions that you can start on today.

4 steps towards a better financial future

1. Work out how much you can afford to save

A monthly budget is a vital step towards financial fitness. It’s the foundation of your action plan.

Nearly 13 million UK adults were overdrawn at some time during 2017.¹That's potentially stressful – not to mention expensive – so your goal with a budget is to have money left over each month.

A few hours spent figuring out where your money’s going could make a big difference.

Budgeting might sound easier said than done, but it doesn't have to be hard. Start by asking yourself how much money you realistically need to live on. These questions might help:

when was the last time you reviewed your big bills such as your rent, mortgage or car repayments? Can you move, switch or trade in to save money?
do you have costly credit card debt? Can you get a balance transfer deal, ideally with 0% interest?
how do you shop for food? By planning your meals, batch cooking and freezing the extra portions, you could save time as well as money
what about utilities, phone and broadband? Can you switch to lower your monthly payments?

The secret to success with sticking to a budget is to pay close attention. Understanding your income and outgoings can reduce your stress – and help you spend less than you earn.

2. Establish an emergency fund

What would you do if you were hit with an unexpected repair bill? Or, worse, if you lost your job? Could you rely on savings or would you need to borrow money?

If you've made a start on step 1 of the action plan, you'll hopefully have some cash left over at the end of each month. Managed to do this for a couple of months in a row? That's a great sign you're getting on top of things.

Rather than spending it, use it to start building up some reserves.

The idea is simple. From the budget you’ve created, you take the figure that you need to spend each month to survive and multiple it by 3 – or even better, 6. That’s the target for your emergency fund. Imagine the peace of mind that would come from having up to 6 months’ living costs to hand.

Of course, it may take some time to get there, but these tips should help:

save your cash in an instant-access account so you can withdraw 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
extra money spare at the end of the month? You could add that

Research suggests that 1 in 6 people would be unable to cope with a £50 increase in monthly bills.¹ An emergency fund could help you feel safe instead of sorry.

3. Protect the things that matter.

Let's be clear. An emergency fund is great for short-term emergencies. But if something terrible was to happen – and sadly, we all know cases where it has – an emergency fund will only go so far.

Protection could provide for you or your loved ones for years to come.

Protection is what we call insurance when it relates to things like your life and your family. Not everyone needs life insurance but if you have people who rely on your income to cover the mortgage or other living expenses, then you may well need it.

Wrestling with the questions of what your family would do without you is tough. Yet it's worth making time to have those conversations now. After all, knowing that you and your family are protected, regardless of what the future might throw at you, that's invaluable.

For a fee-free, no-obligation chat, call one of our protection advisers

4. Prepare for the big moments

OK, so you've got a handle on your spending and built up a decent buffer – great work. You're in a stronger position than many people. And this is the ideal place to start looking to the future.

Whether your focus is on buying a house, starting a family or starting a new life after work, having more money will help make those big moments happen.

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

If you don't want to take any risks, a Cash ISA (individual savings account) could be a good way to save, as you’ll pay no tax on the interest you receive.

There aren’t many risks with saving and with an instant-access account, you can easily withdraw money when you need it. The trouble with saving is that interest rates are currently at an all-time low. And when the rate of interest you earn is lower than the rate of inflation, your money will buy you less and less over time.

Another option would be to consider investing. Investing does come with risk and it’s not as easy to access your money. But if you’re willing to set your money aside for 5 years or more, investing has the potential to make your money work harder than cash

Is investing worth this risk? That’s for you to decide. If you’re ready to explore taking a calculated amount of risk, we offer several ways that could help you to grow your money.

With HSBC you can now get investment advice when you invest as little as £50 per month, or you can choose your own investments from just £100. As you’d expect, eligibility criteria and some fees apply.