Everyone has different financial goals with different ultimate aims – from launching a business to buying a house to investing for a better retirement. But how many of us have the right structures and plans in place to actually reach them?
According to a report by HSBC, the answer is not many. The bank found that while most people surveyed were aware of the importance of saving for the future, they were often too focused on their most immediate goals to do so – with 42% of working-age people typically saving for short-term goals rather than saving or investing for longer-term plans. Likewise, 38% said they lived on a day-to-day basis financially – potentially storing up problems for later in life.
Many of us leave planning for our future too late, even though our longer-term goals often require longer-term arrangements. In addition, we tend to put our cash into property instead of financial products, partly because of the cultural importance attached to home ownership in the UK – with getting a foot on to the property ladder widely viewed as a key milestone. Others buy property as an investment, which can generate a rental income and may grow in value. But we’ve also seen property prices fluctuate, which can affect short-term liquidity, so this needs to be carefully considered from every perspective.
We hit the streets to find out about people’s financial goals and whether or not they had put in place plans to make those goals happen.
Supporting the next generation
Providing for family was a big priority for many. With the rising costs of obtaining a university degree, and less secure work prospects for the next generation, some are feeling less certain about their children’s futures.
“My goal is to put my daughter through university and to pay for her education. She wants to study fine art and to do a foundation course initially, so that’s the biggest thing I’m funding at the moment. I do have a financial adviser who I see now and then, who has given me advice on the best way to invest. I have a plan in place – although I’m not sure how much it will cost exactly. As a self-employed worker, finances and pensions can be complicated, but I’ve been investing into a pension since my 20s. In hindsight I probably should have invested in property!”
“As a nurse who has worked in A&E for a long time, I’m all about living for the moment and spending time with loved ones. Financially, I am stable and have put money aside for my children if they need it. I also have a few months’ wages saved up, in case something breaks in the house. But that’s it – I don’t believe in making big goals and saving up for very expensive things I don’t need.”
For more information about saving for your children, go to HSBC’s saving for children guide
Home is where the heart is
The majority of the people we spoke to mentioned buying property and owning a flat or house as their primary goal. For many it seems to offer the security of housing, as well as a form of investment.
“I’m about to move to Sweden and I’d like to buy a property there with my partner, which might be fairly expensive. My partner and I are savers, definitely. We already have the money saved up for the purchase and I don’t have any debt. I have only ever used my credit card for things like flights and tend to use cash a lot, to avoid spending unnecessarily. I used to shop a lot but that’s changed – I don’t want to be in debt and overpaying for things I don’t need.”
“My goal is to get a mortgage, so I can finally get on the property ladder – but I was recently made redundant, which wasn’t on the cards. It wasn’t great, but the plus side is that I was given a good redundancy package and I already had some savings. My uncle is an independent financial adviser, so he has given me help to get the ball rolling, but my main task is to find a new job.”
For more information about securing your first home, go to HSBC’s first-time buyer’s guide
Investing in your dreams
Other respondents want to put money away to set up their own businesses – from marketing agencies to pizza joints. According to them, the freedom and independence that comes with running their own venture is the primary draw.
“I want to run my own marketing company in Spain – where I’m from – once I graduate, so I’d say that’s my financial goal. Once I’ve done my master’s, I’ll start to save up money for the business. I’ve been asking my parents for money a lot lately, so I do need to have a proper plan in place – it’s just difficult when you’re studying and don’t have much free time. I’m really looking forward to the independence working for yourself brings, and I really like the idea of being challenged creatively.”
“I’m a pizza chef, so my salary isn’t very high, but I want to start my own business eventually. I’m currently trying to put aside money to start my own thing because the freedom of working for myself would be great! I used to work in an office and earned a decent amount, and I started saving 10% of my monthly earnings then. I’m aiming to save more this year as I’ll need additional capital in case anything goes wrong, but it’s hard to make cutbacks when you’re not earning a huge amount.”
For more information about finding the right finance for your business, go to HSBC’s guide to business borrowing
Taking action
Some respondents had very specific goals in mind as well as specific measures to help to fund them.
“I’ve got different [bank] accounts – one automatically invests the change from say, a coffee, into a pot. I’d like to keep putting money aside for the next few years and to hopefully start earning a decent amount of money, but I’m not sure how long it will realistically take.”
“My aim this year is to finish paying for my extension and landscape gardener! I’m retired, so I spend a lot of time at home and in the garden. Last year, I downsized from a larger house to a smaller one, so I have the money to pay for it, which is lucky. I don’t have a mortgage or any huge outgoings and I’m pretty good at staying on top of my finances, but obviously these things cost money. My old house had a stream running alongside it, so I’d like a water feature in my new home, too – that’s the plan, anyway.”
Clearing the debts
Another challenge for millions of people across the nation is dealing with accumulated debts. Getting on an even keel financially is the obvious springboard to building a more secure future, so getting out of the red and into the black is a common goal.
“I’m determined to clear my debts. I’m already putting plans in place to do that over the next few years, including the four-month project management course I’m currently enrolled on. It can be difficult working and studying at the same time, but my goal is to land a job in the project management sector, and hopefully start to earn more. That should mean I’m able to find my way out of debt by making regular payments.”
For more information about repaying your debts efficiently, go to HSBC’s guide to repaying your debts.
Bear in mind, the value of investments and any income they generate can go down as well as up, meaning you may not get back what you invest.
Whatever your goals and no matter your level of confidence with investing, HSBC could help you make better-informed decisions and could help you plan better. From first-timer to experienced investor, wherever you are in your investment journey HSBC could help you take that next step.
