5 steps to plotting your personal finance roadmap

Dani Skerrett

by , Senior Content Marketing Manager

at PensionBee

23 June 2023 /  

Young woman sitting at a table planning on her laptop

Thinking about investing but not sure where to start? While there’s no one-size-fits-all approach to investing, there are some steps you can take to ensure you’re ready to get started. Creating your own personal finance roadmap will help you identify what you want to achieve through your investments, and the options you have for getting there.

1. Take into account your personal circumstances

Firstly, your age. The younger you are, the longer your investments will have to grow and generate a return for you. In your 20s and 30s, you may also have more disposable income and less responsibilities such as mortgage payments and children. If you’re older and are approaching retirement age, while you might be earning more than you did in your early 20s, you have less time to benefit from investment growth. And what about all those years in the middle? You might be taking a break from work to have children or care for family members which will see your income fall or stop altogether. In this case it makes sense to adjust the amount of money you’re spending, saving and investing in line with your new income.

Knowing how much you should invest’s entirely your choice, and depends on your lifestyle choices among many other things. We have helpful guides for retirement planning at different life stages, from as early as your 20s, all the way up to your 50s.

2. Know what your goals are

Think about what you want the money for - are you planning to start a family, saving for your retirement years, or do you simply want to make your money work harder? Having a set goal will help you keep on track and eventually reach it. Knowing what your goals are will help you choose the right product too. For example, both pensions and ISAs have tax benefits, but each type of pension, and each type of ISA has different rules when it comes to how much you can contribute, when you can start withdrawing and so on.

You might be saving for your children’s future, in which case there are specific Junior Pensions and Junior ISAs to consider. Even if you’re on parental leave and only contribute small amounts, if you start doing this nice and early you can benefit from up to £720 in government top ups each year under the current tax relief rules. And if you aren’t working at all while raising your family, there are still ways you can build your wealth as a stay-at-home parent.

3. Put together a realistic time scale

When it comes to your goals, think about how quickly you want to achieve them. If you’ve got 40 years before you’d like to retire and want to invest until then, you’ve got much longer to see your money grow. If you want to buy a property in the next five years, your money doesn’t have as long to grow and you mightn’t want to run the risk of it losing value if the stock market fluctuates in the short-term.

You might be better off leaving the money you have in a more accessible savings account if you think you’ll need to access it within the next few years whether that’s for a wedding, travelling or for growing your family. The less time you have, the more you need to consider the level of risk you want to take when it comes to investing.

4. Consider your level of risk

With any type of investment, there’s going to be a level of risk. Generally, the higher the risk, the greater the potential return. However, this doesn’t mean you should only make higher risk investments, especially if you don’t have other savings pots, like an emergency fund, to fall back on and time to recoup any potential losses along the way. MoneyHelper has a fantastic guide on understanding the risk when it comes to investing, it’s well worth a read before you get started. Once you decide on your preferred level of risk, it’s essential that you ensure the investment platform you choose is regulated by the Financial Conduct Authority (FCA).

5. Do your research

Learn as much as you can - whether you pay an Independent Financial Advisor for advice or seek guidance from websites, podcasts and other free platforms. Websites like MoneyHelper, a government-backed, impartial service, have brilliant guides that explain investing and different types of investments. There are some great websites and resources that are aimed at specifically helping women when it comes to personal finances and investing, like Vestpod and rainchq. And of course, you can always talk to friends and family. While they mightn’t be qualified to give you financial advice, they can support you and share any experiences they’ve had which might be helpful.

If you feel as though you need specific financial advice, and are able to pay for it, make sure that it’s regulated. The FCA has a free register of authorised individuals, firms and bodies.

For more information, and to build your confidence when it comes to investing, take a look at the Good Guide to Financial Wellbeing from Good With Money which is full of tips and resources for women.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

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