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How to create a financial plan
The benefits of financial planning
Financial planning is nothing to be afraid of. It’s just the process of setting out your financial goals and taking action to achieve them. We know it can be a challenge, especially if you are just getting started in your career. We’re here to help you build a plan that’s right for you.
1. Look at your finances
When making a plan for your future, it helps to know what finances you have now. Make a list of your current savings, investments, salary and debts. Be sure to include any regular payments you may have and build a budget that’s right for you. This will help you see if you can set aside any money for the future.
2. Set your goals
Decide what you are planning for. Maybe you’re looking to buy your first home, go on a dream holiday or buy a new car. Or perhaps you’ve set your sights on an early retirement. Whatever your goals, it’s good to work out how much time and money you’ll need to reach them. We’ve created a savings calculator that may help you.
3. Consider the risk
A key part of a financial plan is deciding where to put your money. While investments could earn better returns than savings, they also involve taking on more risk. Whilst savings are relatively secure and can be easier to access. Take some time to understand the risk and work out how much you are comfortable with.
4. Make a plan
Once you know your goals and how much risk you are willing to take, you can then work on your plan. A good financial plan should take into account everyday spending, savings, investments, pension contributions and any mortgage or rent payments you have. It will also need to be realistic so you can stick to it each month.
5. Review and repeat
A financial plan works best when you can stick to it. But if you have a promotion at work or an unexpected expense, it’s worth reviewing your plan to see if it’s still working for you.
Things to consider when starting out
We know that starting out on your financial journey may feel daunting, but it’s easier than you think. Here are some tips that might help you:
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There is no right or wrong time, but the sooner you start saving, the sooner you can start moving towards your financial goals. It needs to work for you. Look at the savings options and see if there is one that’s right for you.
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Many people regularly set money aside to help them reach their savings goals. One way to do this is to set up a monthly payment into your savings account by Direct Debit or standing order, timed for just after payday. Then you can grow your savings while focusing on other things.
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Hopefully you’ll never need it, but an emergency fund can be an essential. We all know life can be full of surprises. Having some money to fall back on could be helpful if things ever take a turn for the worse.
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When it comes to your credit history, it’s good to know the score. For better or worse, credit scores are important if you need to borrow money. Whether it’s for a new phone contract, a mortgage or a new car, a good credit score is important.
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Investments can come with different levels of risk and their value can go down as well as up. These should be kept over the longer term to help smooth out any market fluctuations in their value. You should only invest what you can afford.
We can help you to understand investments and see what could work for you.
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