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 are not alone. Support is available to help you get back on track and feel more confident.
Creating a budget is a vital step towards feeling in control of your finances. Figuring out where your money’s going – and where you could cut back – could make a big difference.
According to the Office for National Statistics, the average UK household has debts of £9,400, excluding mortgages.1 That's potentially stressful – not to mention expensive – so 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:
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 outgoings can reduce your stress – and help you spend less than you earn. Making a note of when bills need to be paid, especially yearly ones such as home insurance, tax or MOTs, can also help you prepare.
Explore our financial fitness tool to help you set achievable goals and plot your progress.
As you begin to save money each month, you can use it to start building up some reserves. This way, if you’re hit 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, but these saving tips may help:
Research suggests 1 in 6 people would be unable to cope with a £50 increase in monthly bills.2 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.3
Explore: Different types of savings accounts
An emergency fund is great for short-term emergencies. But if something terrible or unexpected was 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.
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 and help make your long-term goals happen.
So, how can you make your hard-earned cash work harder?
One option is to consider investing. For example, a stocks & shares ISA allows you to invest in things like shares and funds. 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. Keep in mind – the value of investments can fall as well as rise, and you may not get back what you invest.
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.
To help you decide the best option for you, you can get online advice when you invest as little as £50 per month – or a £1,000 lump sum. Or you can choose your own investments from just £100. As you’d expect, eligibility criteria and some fees apply.
Not ready to invest yet? A Cash ISA could be a good way to save, as you’ll pay no tax on the interest you receive and allows you to withdraw money when you need it.
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.
Explore: Investing for beginners
