Financial Action Plan | Wealth

Acting now doesn't need to be hard

For many people it's not clear where their money will come from when they no longer get a salary. And that can be stressful.

When you add in the pressures of today's bills and basic living costs, not to mention the nice things like holidays, the thought of the future can seem a bit overwhelming.

But don't worry. With our help, you can create a plan of actions you can take today that will make your future self feel proud.

Will a plan really help me?

In a word, yes. Our research reveals that people with financial plans amass over four times (433%) as much in retirement savings and investment levels than non-planners.¹

Knowing what your money is doing for you now and where it might come from in future could give you some serious peace of mind. How nice would that be?

Our financial action plan provides ideas and tips to make your financial life simpler and clearer, and give you more confidence. The goal is to make your today easier and your future brighter.

4 steps to a better financial future

Step 1

1. Work out how much you can afford to save

A monthly budget will set you free… Well, not really, but it is a critical step towards financial fitness and will help you have money left over each month. This is the foundation of your action plan.

Nearly 13 million UK adults were overdrawn at some time during 2017.²That's potentially stressful, not to mention expensive, so your goal with a budget should be to avoid that situation.

A few hours spent figuring it out can make all the difference.

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

The big bills… rent, mortgages and car lending. When was the last time you reviewed your options? Can you get a better deal?
Do you have costly credit card debt? Can you get a balance transfer deal , ideally with 0% interest?
How do you shop for food? Do you do a weekly food shop or buy each day? Buying in bulk, ahead of time is the way to go – last minute purchases are often more costly.
What about utilities? Have you switched to get a better deal?
And your other day-to-day expenses? Travel to work, for instance, can be a big cost for many people. Could you reduce your spend by riding a bike or car-sharing?

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

For an easy way to see your accounts from different banks together in one place, try our Connected Money app. Right now, the app is available to HSBC customers with online banking and an iPhone on iOS 10 or above. Android users and non-HSBC customers – we're working as fast as we can to get the app ready for you.

Apple and iPhone are trademarks of Apple Inc. registered in the U.S and other countries. Android is a trademark of Google LLC.

Step 2

2. Establish a rainy day fund

What would you do if you were hit with an unexpected repair bill or, perish the thought, you lost your job? How would you cope? Could you rely on savings to see you through? Or would you need to borrow money?

If you've made a start on step 1 of the action plan and you're starting to budget effectively, you'll hopefully have some cash left over at the end of each month. If you've done that for a couple of months in a row, that's a great sign you're getting on top of things.

Rather than spending it, this should be saved to help you establish a rainy day fund – aka your 'phew' money.

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

Sure, it may take some time to get there. Yet these tips should help:

Decide where you are going to put the cash you save for your emergency fund. It needs to be freely accessible, and without fees to withdraw. For a range of instant-access accounts, take a look at our savings options.
Develop the habit of saving. Just like brushing your teeth, going to the gym or checking your mobile
Pay yourself a specific amount each month for savings
If you have extra money, from overtime, a bonus or just spare at the end of the month, add that too

Research suggests that 1 in 6 people would be unable to cope with a £50 increase in monthly bills.² The emergency fund is a great way to be safe instead of sorry.

Step 3

3. Protect the things that matter.

Let's be clear. A rainy day fund is a great idea 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 income. 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. Understandably, many of us don't grasp that nettle. 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 priceless.

For a fee-free, no-obligation chat with one of our protection experts, call our Wealth Advice Centre

Step 4

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 it's buying a house, starting a family, changing career or life after work – whatever your vision for the future, having more money will help to make it rosier.

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

To help you achieve your longer-term goals, you might want to consider investing. By investing to make your money work harder, you'll stand out from the crowd – data suggests only 29% of UK adults hold an investment product.²

Investing has the potential to make your money work harder than cash – although bear in mind that the value of investments can go down as well as up, which means you may not get back what you invest. Is investing worth the risk? Read our article to see for yourself.

If you don't want to take any investment risk, a cash ISA could be the best way to save as you pay no tax on the interest you receive – although the value of any tax benefits described depends on your individual circumstances, and tax rules may change in the future. Explore our cash ISA options

However, if you're ready to explore taking a calculated amount of risk, we offer several ways that could help you to grow your money:

If you'd like to get advice on how to invest, you can get our personalised recommendation when you start investing with just £1,000. Invest with advice
If you're interested in funds, our online fund platform, Global Investment Centre, lets you research, buy and monitor your investments. Invest in funds
If you'd prefer to choose individual stocks and shares, our online sharedealing service, InvestDirect, lets you create and manage your own portfolio. Invest in shares

For all of these options, fees apply – please click on the links to find out more.

Whatever your level of confidence, we're here to show you where the stepping stones are so you can build a robust financial action plan.

The key is to get started today. With HSBC, you can think big by starting small – and in doing so, make your future-self super-proud

Explore your investment potential

If you’re setting money aside for your future, you’re already an investor. We want to help you become a better one. Because what you do with your money today could make a difference to how it grows tomorrow.