Prep today, plan tomorrow

We’ve got some tips on how to start building a financial plan that suits you. Try breaking down your goals into short-term, mid-term, and long-term.

 
A young woman out running at dawn.

Savings made easy

  • Short-term goal - build a rainy-day fund.​
  • Mid/long-term goal - explore investing.​
  • Long-term goal - it’s never too early to think about your pension.​
     

​We see short-term as less than 5 years, mid/long-term as 5 to 10 years and long term as 10 years plus. 

Live your best life, with one eye on the future

Where did the time go?  One minute you were beginning to hurtle down into your career rabbit hole. Now you might be juggling travelling, getting on the property ladder, starting a family, or adding to it… ​

Right now, everything is an opportunity. Even managing your money. Young Britons are showing more interest in their finances and looking at ways to increase their wealth, according to recent research from professional services firm, EY.  ​

Chances are, you’re looking for a bit of help in that area.  So, we’ve pulled together a few hacks for trying to achieve short, mid, and long-term goals to help you live your best life now, while helping to secure your financial future.          ​

Short-term goal: Bank on bad weather with a rainy-day fund

Protect your financial peace as your first short-term goal. Building a rainy-day fund for unexpected costs means you can be confident to bat away whatever life throws at you. ​​

Our simple rainy-day fund calculator  will run the numbers on how much you personally need to set aside. As a general rule, it’s best to aim for at least three months of essential expenses. So, if the worst were to happen and you did lose your job, your boiler breaks down or you have another major expense you weren’t planning, you have some breathing space between you and your bills. ​

The ideal place for this rainy-day fund? Consider an instant access savings account or a cash ISA, so you can dip into it whenever you need. Set and track a goal within the app to help you save for your rainy-day fund if you don’t have one already. 

Short-term goal: A cash savings account to help you pile on the pounds

​Beyond your rainy-day fund, savings accounts or cash ISAs could be useful for holding onto money for things you’d like to do in the next five years. A long-haul holiday. The car upgrade. The wedding that started small but now has to include all the great aunts and second cousins twice removed. We have a range of savings accounts and cash ISAs  to help your money grow.​

Mid to long-term goal: Finding your feet with investing

Once you’ve got your rainy day fund and cash savings sorted, one way to potentially make more of your money is to think about investing. Generally we say investing is worth looking at for money that you don’t need in the next five years. So investing would be a mid-term to long-term goal as you save for something like buying a home in the future.​

Lots of people invest as it gives them the opportunity to potentially gain more than if they’d put that money in a savings account. However, do be aware that investments go down as well as up and there is never any guarantee of returns. ​​

Investment's 10-year track record:
 

This graph shows a comparison of savings and investments over 10 years.

If you’d invested £1,000 in a fund tracking the S&P World Index (it tracks medium to large companies across 24 developed markets) in 2015, it would have been worth £2,659 in January 2025. Whereas £1,000 kept in a typical savings account would be worth £1,229 in January 2025.

Source:
(Savings) MoneyFacts, 12m Fixed Non-ISA rates, January 2025.

(Investments) S&P Dow Jones Indices, S&P World Index (GBP). Excludes fees. Past performance is not a reliable indicator of future performance. You can see a breakdown of these figures here.

Past performance is not a reliable indicator of future performance. Please remember that the value of investments and the income from them can fall as well as rise, and you may get back less than you invest. If you’re not sure about investing, seek financial advice. There will normally be a charge for that advice.

Our Save & Invest calculator in the app shows you how your money might perform, depending on whether you save or invest, or both.

Investing needn’t be complicated, but you should be OK with tying up your money for at least five years to make it worth it. ​

Making the jump into investments can be daunting at first, so we’ve created a wealth of handy info in our app to help you understand more. Our ‘What is investing tool’ in the app is your go-to online guru. 

Then if you’re ready to go, our Ready-Made Investments  can get you started, or you can choose your own investments through our Share Dealing Account.

Still have more questions? Speak to one of our Financial Coaches  instead. They can help get you started.

Long-term goal: Help your future self

It can be a bit much to think about putting money away for retirement just yet, but starting a pension early is one of the most valuable things you can do for your future self. ​

By saving in a pension now, there’s more time for your money to grow. Plus if you’re employed, your employer usually has to contribute to your pension – it’s free money for the taking. ​

You also get tax relief at your income tax rate – a boost from the Government. This means £100 put into a pension costs you just £60 if you are a higher-rate taxpayer (earning between £50,270 and £125,140) or £55 if you’re an additional rate taxpayer (earning more than £125,140). You can pay in up to £60,000 a year and benefit from tax relief.

Tax treatment depends on individual circumstances and may change in the future.​

Pro tip: If you are a higher-rate taxpayer and your employer doesn’t do salary sacrifice, make sure you claim the extra tax relief through an annual HMRC tax return. ​

Our simple pension calculator shows what pension contributions you need to think about making to get the type of retirement you’d like. But, remember that returns are never guaranteed with investing and investments can go down as well as up.​

How to achieve the retirement you want, if you started pension contributions now

Table of required contributions to meet projected annual pensions

Age

25

30

35

40

45

50

Age

Monthly pension contributions required for minimum £14,400 a year in retirement

25

£110

30

£135

35

£165

40

£205

45

£265

50

£360

Age

Monthly pension contributions required for minimum £31,300 a year in retirement

25

£750

30

£900

35

£1,115

40

£1,405

45

£1,805

50

£2,450

Age

Monthly pension contributions required for minimum £43,400 a year in retirement

25

£1,200

30

£1,450

35

£1,800

40

£2,225

45

£2,880

50

£3,915

Please note the figures included in the table are approximate.​

Assumes retirement age of 67, growth rate of 5%, inflation rate of 2% in line with current FCA guidance, taking 25% tax-free lump sum and a full State Pension of £11,502 a year included. Source: www.lloydsbank.com/pensions/pension-calculator.html ​ ​

The retirement benefits you receive from your pension plan will depend on a number of factors including the value of your plan when you decide to take your benefits which isn't guaranteed, and can go down as well as up. The value of your plan could fall below the amount(s) paid in.​​

Our pension calculator is only a guide and based on a number of assumptions below. It assumes you are taking a guaranteed income for life, also known as an annuity.

  • State Pension

    We've assumed you could receive a full state pension entitlement of £11,502 per year if at the qualifying age. We remove this from the calculation if you are under the qualifying age.

    You can get a personal State Pension Forecast here

    Income Tax

    We've used a basic English income tax calculation, which assumes you will not receive any additional income at retirement.
    Tax treatment depends on your individual circumstances.
    Your circumstances and tax rules may change in the future.

    Contributions

    The tool assumes that contributions will be made every year including the year of retirement, with monthly contributions annualised for calculation purposes. With the results showing any contributions ceasing before age 75.

    Growth Rate

    We've assumed a growth rate of 5% per year to your pension value, annualised for calculation purposes.

    Inflation

    We've assumed a 2% inflation rate in line with current FCA guidance, annualised for calculation purposes.

    Charges

    We've assumed a charge of 0.7% per year, annualised for calculation purposes.

    Tax-Free Lump Sum

    We've assumed that a 25% tax-free lump sum will be taken out of your pension, and the full amount of projected pension will be taken as income. However, it is possible to amend this percentage.

    Retirement Living Standards

    We use estimations from the PLSA/Loughborough University Retirement Living Standards for a single person.

    Withdrawal rate

    We've assumed that you are taking a guaranteed income for life, also known as an annuity at 4% per year of the projected funds. This will be after any tax-free cash up to 25% has been taken.

    Pension allowances

    We've not assumed any tax charges from exceeding allowances such as the annual allowance or money purchase annual allowance.

    Net and Gross Figures

    All of the figures we provide are net (i.e. after deduction of income tax) except for the gross monthly pension contribution figure.

 

Go for it​

Money doesn’t have to be hard and we’re here to help. Book in a free session with a Financial Coach to chat about any money questions you have. We can help you work towards your financial goals.

Chat to a Financial Coach

Save & Invest calculator

Discover how your money might perform using our Save & Invest calculator.

Try it now

What is investing?

Find out more about investing and knock down any barriers.

Learn more

Pensions calculator

Our pension calculator offers a guide to what your retirement income could look like. 

Try it now

Set and track your goals

Whatever you may be saving for, you can now set, manage and track your goals.

Set a goal

Important information – This article isn’t personal advice. If you’d like to discuss any of the topics covered here, including the actions for your individual circumstances, please contact your financial adviser. If you do not have a financial adviser, you may be able to access one through our partnership with Schroders Personal Wealth (fees and eligibility criteria apply). Unbiased is a service that finds a local adviser based on your requirements. You can also find mortgage brokers, accountants, and solicitors on Unbiased.
 
The contents of this page are accurate as of 10/01/2025. Our views and references to pensions, tax, investment, or their rules, may have changed since then.