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, putting money aside for school or university fees or a comfortable retirement.
Whatever your financial situation, now's the time to make some positive changes to help maximise and shore up your finances, whatever the economic outlook. The key is to get started. Because these first few steps could set you off towards a very different future.
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. For example, saving just £2 a day would give you £730 a year, so it's worth thinking about switching service providers, like your mortgage or gas and electricity to see if you could save a packet. Make sure to set achievable goals and a budget to work towards by asking yourself the following questions:
when was the last time you reviewed your big costs?
For most people in the Channel Islands and Isle of Man, rent or mortgage is the 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.
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 where your money goes. 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 and car insurance or tax, can also help you prepare.
In the current economic climate, it's a good idea to start building up some reserves. This way, if you're faced with unexpected expenses, you'll be less likely to need to borrow. It's advisable to have 3 to 6 months of living costs saved up for your emergency fund, just in case.
These saving tips may help:
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 any luxury purchases until your emergency fund's in place
Having cash as a buffer – no matter how much you earn – is linked to an increase in life satisfaction and feeling more financially secure. If you prepare for the unexpected, it's much more likely to be plain sailing, however choppy the waters.
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.
Explore: Insurance to protect what matters to you.
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.
When it comes to investing, 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.
Making a longer term investment plan is one option to consider, and is seen as an alternative to a pension scheme as a way of saving for retirement. A fixed amount could be invested on a monthly basis for example, which may smooth out any short term volatility in markets. This approach is known as pound-cost averaging. It's important to remember that time in the market is more dependable than trying to time the market, so look to invest over the longer term.
We've got plenty of options for managing your wealth and planning for the future:
HSBC Bank plc, Jersey Branch has prepared this article based on publicly available information at the time of preparation from sources it believes to be reliable but it has not independently verified such information.
HSBC Bank plc, acting through its registered branches in Jersey, Guernsey and the Isle of Man and the HSBC Group are not responsible for any loss, damage, liabilities or other consequences of any kind that you may incur or suffer as a result of, arising from or relating to your use of or reliance on this article. The contents of this article are subject to change without notice. HSBC Bank plc, acting through its abovementioned branches, and the HSBC Group give no guarantee, representation or warranty as to the accuracy, timeliness or completeness of this article.
This article is not investment advice or a recommendation nor is it intended to sell investments or services or solicit purchases or subscriptions for them. This article should not be used as the basis for any decision on taxation, estate, trusts or legacy planning. You should not use or rely on this article in making any investment decision. HSBC Bank plc, Jersey Branch, Guernsey branch, Isle of Man branch and the HSBC Group are not responsible for such use or reliance by you.
Any market information shown refers to the past and should not be seen as an indication of future market performance.
You should always consider seeking professional advice when thinking about undertaking any form of prime residential or commercial property purchase, sale or rental.
You should consult your professional advisor in your jurisdiction if you have any questions regarding the contents of this article.
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