The UK Personal Finance Flow Chart
Step 0: Budget and reduce expenses, set realistic goals
Step 1: Build a small Emergency Fund
(1-3 months)
Step 2: Automatic Enrolment Pension
Step 3: Build a full Emergency Fund
(3-12 months)
Step 4: Pay down debts
Step 5: Save for short-term goals
(<5 years)
Step 6: Invest for long-term goals
(>5years)
Start Flowchart
Know where your money is going by creating a solid budget plan. Consider a tool like Emma.
Check your state supported entitlement at entitledto.co.uk
Pay Income Earning Expenses
(e.g. transport to work)
Make minimum payments on all debts
Insure what you can't afford to replace such as:
- Home, Car, Life, Income, etc.
Pay non-essential bills in full
(Internet, Phone, TV)
Are you reliant on credit to make ends meet?
Seek debt councelling from a reputable charity.
Visit stepchange.org
Okay, what's next?
Build a small Emergency Fund
(1-3 months of outgoings)
Ensure you are (auto)enrolled in company pension.
Take advantage of matched contributions or any other available company contributions.
Do you have any high interest (4%+ PA) debt?
(excl. student loans)
Pay off high-interest debt using a debt-management method such as Avalance (highest SPR debt first, more efficient), or Snowball (smallest debt first, less efficient but with possible psychological benefits)
Find out more on each method here
Sure, then what?
Build a full Emergency Fund
(3-12 months of outgoings)
Are you saving to buy your FIRST home?
Consider opening a Lifetime ISA (LISA)
I'll look into it. What's next?
Do you have other short term goals?
Find highest-interest-paying savings account and keep short-term savings in cash. Trading 212 offer competitive rates.
Great idea. Let's keep going...
Do you have long term goals?
Congrats. Increase your discretionary spending budget and enjoy your money!
Don't know what to buy? Check out Dead Wallet for some spending ideas
Does your goal happen before you can spend pension funds?
(~58 years old)
Is the total cost of your workplace pension ≤ 0.5% PA?
Open a SIPP and invest in low-cost global index trackers
(If in 40%+ tax bracket, claim additional relief)
Pension full or on track for £1m before retirement?
Additional contributions to company pension
(If in 40%+ tax bracket, claim additional relief)
Pension full or on track for £1m before retirement?
Are you on track for your retirement goal?
Do you have any other goals?
Invest in low-cost global index trackers. Consider a provider like InvestEngine. After S&S ISA, use a general investmen account.
Well done! If you have no other goals, you can increase your discretionary spending budget and enjoy your money.
Don't know what to buy? Check out Dead Wallet for some spending ideas
Combine S&S ISA with pensions
Invest in low-cost global index trackers. Consider a provider like InvestEngine. After S&S ISA, use a general investmen account.
Consider S&S LISA in certain niche circumstances