Forming healthy financial habits takes time and effort. Here is a reminder of the main points to keep in mind.
- Live within your means: Keep track of your monthly income and expenses and develop strategies for freeing up funds to cover your expenses if you need to. Create a budget to help you to map out how you will spend the money you earn.
- Spend wisely: Get into the habit of dividing up your expenses into needs, wants and savings or debts. If you can, aim to spend 50% of your net income on needs, 30% on wants and 20% on savings and debts each month.
- Free up funds: If you are not saving as much as you would like to, or find it hard to cover all your costs each month, look for simple ways to cut costs and reduce your expenses. At the same time, think about ways you might be able to increase your overall household income.
- Build emergency savings: Aim to build up enough savings to cover at least three months of essential expenses, in case of emergency.
- Avoid excessive borrowing and manage your existing debt: Aim to borrow only what you can reasonably afford to pay back. Take steps to manage debt that you have already, for example, downsizing to free up capital, approaching your lender for support, or consolidating debts.
- Save for the future: Start saving for your retirement as early as you can. The younger you start, the bigger your retirement fund. Remember that compound interest quickly mounts up.
- Protect what matters: If you can, take out insurance to protect you from risk that you would not be able to cover yourself, like losing your household’s main income through illness or injury.
- Beware of scams and fraud: Online financial fraud is on the rise, so take steps to avoid becoming a victim of cybercrime. Remember the saying if something sounds too good to be true then it probably is.
Next Steps for Developing Healthy Financial Habits
- Start tracking your expenses and creating a budget: If you are an HSBC customer, we offer a number of ways to help you to manage your money with technology and tools. Find out more here.
- Ask for help: We're here to help you find the right solution to your individual financial difficulties. So get in touch using our Online Chat tool if you are finding it difficult to manage your debt.
- Explore your savings options: Find out more about the right solutions for your short-term and long-term savings.
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