Get financially fit

Many of us talk about getting physically fit but have you thought about your financial fitness? The general rule of thumb is you should have enough money set aside to cover you for 3 months, in case life throws you a curve ball. But if your income suddenly stopped, how would you pay for the essentials like your bills and the weekly food shop?

 

Whether you’re new to saving or you’ve already started, a financial fitness plan can help you build some money muscle.

Budget, budget, budget

The first step to financial fitness is working out where your money goes each month, to help you spot areas where you might be able to cut back.

 

Start by reviewing your monthly income and outgoings, listing the essentials (mortgage or rent, household bills etc) and non-essentials (meals out, takeaways, coffee etc). This will help you understand how much you could afford to put aside each month – but setting a budget doesn’t mean you have to completely cut out all the treats.

 

Try to make your plan realistic, something you can stick to. You need a balance of growing your savings and being able to treat yourself every now and then. By making just a few small changes, you’ll be amazed how quickly you can build up a healthy rainy-day pot. And the more you can put away each month, the quicker your pot will grow.

Making saving interesting...

A savings account can be a good place to store your money as you’ll earn interest, so it’ll grow faster than keeping it under your mattress. There are lots of different options out there, so finding the right account for you is really important.

 

Take a look at our savings comparison table to review all the options.

Emergency fund to the rescue

Life can hit us with unexpected expenses at any time, from forgotten bills to sudden home repairs. Having an emergency fund means you don’t have to make tough financial decisions on the spot or borrow money unnecessarily if disaster strikes.

 

An instant access savings account can be the perfect place to keep an emergency fund, as you’ll earn interest but can still access the money quickly if you need to.

Impress future you

If you’ve already saved money and built an emergency fund, here are some things to consider as you start looking to the future.

Long term saving and investing

When you’re planning for longer-term ambitions like a career break, it might be worth considering a Fixed Rate Savings Account.

You tend to get a better interest rate and because you can’t make part withdrawals during the fixed period, you aren’t tempted to dip in.

If stocks and shares are part of your strategy, you can use some or all of your ISA allowance through our Sharedealing services. It works in pretty much the same way as a normal Sharedealing account, but you can invest up to the annual £20,000 ISA allowance and not pay any UK income or capital gains tax on the returns*. As ever though, it’s worth keeping in mind that investing should be seen as a medium to long-term commitment and the value can go up or down, so you might not get back what you invest.  

Review your pension

Pensions can be a tax efficient* way to save, so it might be worth looking into them if you don’t already have one.

If you do, there are simple ways you can boost your final pot. You could pay in:

  • more to your personal pension or workplace scheme; if you have a workplace scheme some employers will match extra contributions, up to a certain amount
  • lump sums, like bonuses
  • more if you get a pay rise
  • the equivalent cost of a large expense that’s ended, like a car loan.

Usually, you can only take money out of a workplace or personal pension once you're 55 or older and from April 2028 you’ll need to be at least 57.

There are limits on the amount you can pay into pensions each tax year, without paying tax. We can’t give tax advice so please speak to an independent adviser if you’d like some.

*Remember, the value of tax benefits depends on individual circumstances and tax rules may change in the future.

Stay in shape

Building your financial fitness can take time, but if you have a good plan with the right balance, it can help you grow your money and get where you want to be. To stay in tip top financial shape, it pays to revisit your plan at least once a year, to make sure you’re staying on track and to check if anything needs adjusting.