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:
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:
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.
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