Financial freedom is something we’re all striving for, but it’s not always easy to know how to get there. Here, we’ll take a look at your options on how to move closer to this.
Your first priority, after ensuring you are able to cover essential expenditure, should be to create a cash buffer. This is an amount of money usually kept in an accessible savings account, there for any emergencies. It is recommended that this is made up of at least three months’ worth of your essential expenditure. Creating a cash buffer helps to take the pressure off future unexpected expenses. So if putting money aside is one of your financial goals, then you could commit to putting any extra money at the end of the month into creating this buffer.
This is a great short-term solution, and should be your first port of call, but what should you do once you have this? Well, for longer term objectives of five years and over, you should consider looking at two tax efficient investment products; an individual investment account (Stock & Shares ISA) or, if appropriate, adding to a new or existing pension scheme.
We know there are some preconceptions around investing, so we wanted to try to dispel some of those myths and explain a little more about your options to help you make the most informed decision you can.
Myth: Investment is really only for those who have already built up a large pot of money and pay for the advice of a financial adviser.
Reality: You can build up funds for investment as part of your regular monthly budget. Advice does not need to be expensive.
Myth: Investment into the stock market is only for investors who understand stocks and shares and regularly read the financial papers.
Reality: You can self-invest or seek advice from an adviser who will help determine how you feel about investment risk and your capacity for loss. It’s important to remember that with all forms of investment there is an element of risk involved as markets shift continuously.
At OpenMoney, we offer a free financial health check based on the answers to a few simple questions regarding your income and expenditure.
We will provide a recommendation for you to review, and then offer an initial discussion with one of our dedicated financial advisers at a time that suits you, totally free of charge.
If we don’t think that it is the right time for you to invest, we’ll tell you and discuss the reasons why. For example, if there is still unsecured debt to reduce or if you should focus on the creation of your savings buffer, we’ll recommend that these should take priority over investment.
If you are considering long term investments, our charges are some of the most competitive in the marketplace and are easy to understand. We can also advise on your existing stocks and shares ISA and/or pensions as part of a full financial review. You can start investing with as little as £1.00, either as a lump sum or as a monthly investment to build financial security for the future. You can find more information on OpenMoney’s services at:
OpenMoney also has a free budgeting tool which can help you identify any discretionary income you might have. It gives you a birds-eye view of your full financial picture by linking all of your bank accounts in the app so you can see all of your transactions, budgets and savings easily. On top of that, you will receive personalized savings tips and tools to help you make the most of your money.
So over this month, together we’ve reviewed your financial essentials, how you can create a financial plan and even how to make the move towards financial freedom.
If you're ready to continue on this journey and make the move towards better financial wellbeing, check out some of our resources below!
1. In case you missed it – Financial Essentials: What are they and do I have mine dealt with?
2. In case you missed it – Financial Essentials: The Plan.
4. Comparison sites: Money Supermarket, Compare the Market, Go Compare, Which?, MoneyFacts.
5. Clearing debt: Step Change, National Debtline, Citizens Advice.
6. Education: Money Saving Expert, No Bull Business School, Toni Tone - Radio 1Xtra Money Moves, @myfrugalyear.
7. Advice: OpenMoney, the Pensions Advisory Service, the Money Advice service, Citizen’s Advice.
8. Check your credit score - Experian.