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. You could use a budget planner to help figure out where your money’s going – and where you could cut back.
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:
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, reach out – there are lots of people here to support you.
Do you know how much your other bills are?
Utility bills, phone, 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 into your basket, ask yourself if it’s essential or genuinely making 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 outgoings can reduce your stress – and help you spend less than you earn. Making a note of when bills need to be paid 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.
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. 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
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