Financial Planning

How to Start Your Own Financial Education

How to Start Your Own Financial Education

Everything you could ever want to know about money is available online, but where do you start? Depending on the source (and any vested interest they might have) the most important priority could be paying off debt, investing in property, or saving as much as possible for retirement.

Some swear by investing in Bitcoin, and others maintain that you must have a second source of income, without which poverty is just around the corner.

None of these suggestions are wrong, it is just a question of priorities and where you are in your financial journey.
No two financial plans are alike, and in order to start your financial education, you should take a look at your own situation first.


Step 1 – Work Out Your Goals

This is a vital starting point as it helps to filter out some of the noise. If you are not interested in share trading or cryptocurrency, and they don’t help you achieve your goals, you can ignore those options.

You don’t need to be particularly realistic at this point, simply consider where you would like to be in your life.

For example:

  • Buying a first home
  • Planning a secure retirement
  • Giving your children financial security
  • Providing for luxuries


Step 2 – Set a Budget

No one likes to spend their weekend staring at their bank statements, but if you can manage it once, you will be in a much better position.

First of all, you need to understand everything that is coming into your account every month. This may include salary, self-employed income, rental, or State benefits. Total up your net income.

Do the same with your outgoings. Check for any anomalies – are you still paying direct debits for contracts you cancelled months ago?

Common sense applies here – if your outgoings are more than your income, you may have a problem.
Even if your income is comfortably covering your expenses, there may be ways to boost your surplus.

For example:

  • Earning extra money
  • Cutting costs on shopping, restaurants and days out
  • Reviewing your mortgage and insurances
  • Shopping around for the best deal on your phone, utilities and TV package
  • Cancelling anything you don’t get value from

The Money Saving Expert website is a great resource to start your financial education, and covers all of the topics above.


Step 3 – Create an Emergency Fund

Now that you know your surplus income, and how to increase it, the first priority should be building up a cash fund to deal with any emergencies. This means that if the unexpected does happen, you can deal with it without worrying or getting into debt. A fund of around 3 – 6 months’ expenditure is enough in most cases.

A Cash ISA is one option, but you should look at all of the accounts available to determine the best interest rate. It is also worth considering how often, and how quickly you may need access to your money, as easier access accounts often have lower interest rates.

Remember that the first £85,000 (double this for joint accounts) of any cash account is protected by the Financial Services Compensation Scheme, so if the bank fails, you will get your money back. This applies per banking license, so if you hold £85,000 with HSBC and £85,000 with First Direct, only £85,000 in total would be protected. Check with your bank if you are unsure.

You can find more information and compare savings account at Money Facts.


Step 4 – Check You’re Protected

Learning about insurance is possibly the least exciting step on your financial education journey, but it is vitally important. A death or life-changing illness could have a major impact on your family. Broadly, most people should consider:

  • Income protection
  • Life insurance
  • Critical Illness

Financial advice can be valuable in deciding how much cover you need, as well as identifying the most suitable insurer.


Step 5 – Review Debt

Debt is a means to an end, and it is not always a bad thing. Sometimes it makes sense to borrow, even if you have other resources, as your money could be better used elsewhere.

Of course, high interest credit cards should be repaid as soon as possible, and payday loans should be avoided at all costs (which is easy when you have an emergency fund).

It is always worth reviewing your mortgage, as it may be possible to reduce your interest rate and save money. Professional advice can be invaluable, as remember, each application will leave a footprint on your credit report and may affect future applications.

If you are concerned about debt, you can find out more via the Citizens Advice Bureau.

It is also worth understanding your credit score, and how you can improve it. You can do this for free at ClearScore.


Step 6 – Secure Your Retirement

Pensions are a complex area, but the first thing you need to do is make sure that you are opted into your workplace pension if you have one available. Your employer is required to contribute, so if you are not enrolled, you are turning down extra money.

As you have decided on your goals, you will have a good idea by now of how much you are likely to need in retirement. Your pension provider may have a calculator on their website to help you establish how much you need to pay into your pension. Of course, you may prefer to seek financial advice, as a detailed cashflow plan, reviewed regularly, can give you even greater certainty.

You can find out more about pensions using the Pensions Advisory Service.

We would recommend taking financial advice before making any major decisions about your pension.


Step 7 – Investing

With the basics of financial education covered, you may now want to learn a bit more about investing. Perhaps you have a specific goal you would like to save towards, or simply wish to create more flexibility for the future.

The mechanics of investments are relatively complex, but the main points you need to understand are:

  • The main asset classes
  • The concept of risk and reward

A good starting point to understanding investments is the Money Advice Service.

You can create your own investment strategy, or you can speak to a financial adviser if you would like more help.

This guide is created for information only, and does not constitute financial advice. Please do not hesitate to contact a member of the team if you would like to find out more. Contact us today on 020 8366 4400 or

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