28 Day Financial Fitness Challenge – Week 4

15 min Read Published: 22 Jan 2022

Own it, Fix it, Grow it

If you missed the previous weeks of the challenge you can access them here:

Fix it - Week 4

Day 22 - Build an emergency fund

Task: Building an emergency fund manually:

  1. Calculate the size of your Emergency fund - between 3 to 6 months net income is ideal. Then calculate how much a month you will set aside to save this amount
  2. Put this money aside every month ahead of everything but your mortgage/rent. Making a direct debit or standing order payment into a separate bank account is a good idea.
  3. Put any spare money you have left over each month into your Emergency Fund (e.g if you receive a bonus)

Building an emergency fund by hassle-free saving with the option to invest:

  1. Download the Plum* app or the Moneybox app and sign up
  2. Plum's algorithm will analyse your spending within your current account and start saving money automatically. Moneybox analyses your spending and rounds up any payments to the nearest pound and saves the change into a savings account for you.
  3. Transfers are made every 4 or 5 days into a Plum savings account and once a week with Moneybox. For more information on how Plum can help you save automatically read our article Easy ways to build a cash buffer.
Key Takeaway: Life is full of surprises, and in particular financial surprises. One way to combat these nasty surprises is to build a financial 'buffer' in the form of an Emergency Fund, which is a sum of money, separate from other savings, that you can turn to in times of trouble. Three months' net income is a good starter, but don't be worried if this figure seems unobtainable. You will be surprised how quickly it will build. That may seem easier said than done but there are now easy ways to start building a cash buffer without even realising you are doing it. The article in the resource section will give you more information and tips on building an emergency fund.
Time Required: 15 mins
Click to play:
Resources Building an Emergency Fund – the what, why & how

Day 23 - Reducing your mortgage payments

Task: To review your mortgage it is best to use a mortgage adviser because the mortgage rates you see on comparison websites are only indicative. If you don't know a mortgage adviser whose opinion you trust, then you can:

  • Request a free mortgage review* from a vetted FCA-regulated mortgage professional. Typically the free remortgage check saves people around £80 per month per £100,0000 of mortgage or...
  • Get a free online mortgage review through Habito*, one of the first online mortgage brokers in the UK who will check over 20,000 mortgages from more than 90 mortgage lenders for you before making a recommendation
Key Takeaway: If you already have a mortgage then you may be paying an unnecessarily high interest rate on your mortgage, therefore wasting money. Most people don’t realise that they could be £100s better off a month by reviewing their mortgage. Reviewing your mortgage may seem daunting but it’s easier than ever and it can even be completed online from start to finish, without the need for any face-to-face meetings.
Time Required: 20 mins
Click to play:
Additional Reading: Remortgaging in 2022 – is now the right time to fix & for how long?

 

Day 24 - Evaluate your personal insurance needs

Task: Take our simple 2-minute quiz which will help you check your personal insurance needs and whether you need to take out a personal insurance policy and which type may be suitable.
Key Takeaway: While a lot of people understand the importance of home and car insurance, personal insurance such as life insurance, critical illness insurance and income protection insurance are often overlooked. One problem is the array of protection products available, which in itself confuses people, but more importantly most people simply don’t appreciate why they need to take out insurance. The 2 minute quiz above will help you determine whether you may benefit from personal insurance.

If you already have life insurance the podcast clip below discusses the 7 occasions when you should review your life insurance policies.

When it comes to income protection be sure to read the article in the resources section on the topic. Also, your completed budgeting spreadsheet will help you determine how much income protection you need. It must, for example, cover your essential bills (under the Needs section of your spreadsheet).

Finally, don't forget to take into account any insurance benefits provided by your employer.

Time Required: 10 mins
Click to play:
Additional Reading: How much life insurance do you need?

Types of life insurance explained

How can I reduce my life insurance premiums?

7 reasons to review your life insurance

Income Protection – do you really need it?


Over the next two days of the 28 Day Financial Fitness Challenge, you will be looking at your pensions and investments. We won't go into too much depth as we will cover both in more detail in the full Grow it phase which will be launched next month.

Day 25 - Building your retirement plan

Task:
  1. If you are employed make sure you don't opt-out of auto-enrolment if you are eligible to join. The minimum total monthly contribution currently stands at 8% of your qualifying earnings, of which 5% is provided by you and 3% by your employer, the latter is effectively free money.
  2. Read our article How to Quickly and Easily Calculate your Pension which includes a pension calculator that will only take 2 minutes to complete, It will help you gain a better understanding of where you are with your retirement planning and what you need to do to get to where you want to be. It also includes how to find out your potential State Pension (not everyone gets the same).
  3. If you don’t already have a pension in place then read our article ‘How to start paying into a pension’. It is never too late to start saving for your retirement.
  4. Listen to the podcast clip below to find out how you can get a £30k a year pension for £80 a month
  5. If you have multiple pensions, possibly from past employers, then read our article What is the best way to combine my pensions?
Key Takeaway: Remember if you already have some form of pension in place, be it a company pension or personal pension, you will likely have been asked to complete an expression of wish or nomination form when you joined. This documents who you would like to inherit your pension(s) after your death. It’s vitally important that you contact your pension provider(s) or employer to check who you have named on this form to see if it still reflects your wishes, especially if you have divorced or remarried since you completed it. That way you can ensure that your dependents can inherit your existing pensions outside of your estate and also avoid paying inheritance tax on the proceeds.
Time Required: 30 mins
Click to play:
Additional Reading: How much money do you need to retire and what will your pension be worth?

How much income could I get from a £100,000 pension pot?

What is the best way to combine my pensions?


Day 26 - Investing

Task: Take a look at the following articles as they will give you an insight into the best places to invest your money and the investing options available to you. 

  • How to start investing - this short article explains the basics of investing and how to invest your money yourself or alternatively get a professional to invest your money for you
  • How to choose the best ready-made ISA portfolio - most people will invest via a Stocks and Shares ISA. This article explains how to choose an ISA where the investment management is already taken care of

You may already be a seasoned investor but haven’t had the time to review your investments. If this is the case then have a read of my article ‘how to maximise your investment returnswhich explains steps to take to reduce costs, build a diverse portfolio and pick the right investments.

If investing is not for you and you would prefer the safety of cash then here are our best-buy savings accounts tables covering the whole market.

Time Required: 30 mins
Click to play:
Additional Reading: A beginner's guide to investing

Get the best return on your £50,000 investments

The best Stocks and Shares ISA

Best investment apps in the UK - how to invest from your mobile

Best trading apps for beginners in the UK

 

Day 27 - Investing for your child's future

Task: If you have spare money at the end of the month, then there are a number of options available when deciding to invest for your child's future

1 - Read our article Investing for children: What are your options? to learn how to get started.

2 - Listen to this episode of the Money to the Masses podcast titled ‘How to become a millionaire’ below. The feedback from listeners has been incredible with many crediting it as being the catalyst they needed to finally start investing for their children's future.  

Time Required: 30 mins
Click to play:
Additional Reading: Best Junior stocks and shares ISA

Day 28 - Financial Advice & Retake the Money MOT

Task:
  1. Having completed the 28 Day Financial Fitness Challenge, you may have uncovered some problems,  difficulties or questions in your finances that you could use some advice resolving. Read our article ‘Do you need financial advice?’ which will take you just three minutes. It will help understand if/when you should seek financial advice and how to find a financial adviser you can trust. It may not be relevant now, but it may be in the future.
  2. Having now completed the 28 Day Financial Fitness Challenge you should congratulate yourself. You should have completed your black book (the "Own it" phase) and fixed a number of the issues you've uncovered, or have a plan in place to do so in the "Fix it" phase. Now go back and complete my Money MOT to see how much your score has improved and please email me at [email protected] to let me know.
Key Takeaway: If it was left to the financial adviser industry they would tell you to almost always seek advice from them (which isn’t a surprise given that they charge you for it) while a lot of journalists give the impression that you should just do it all yourself (which in fact isn’t always possible or advisable). The truth lies somewhere in the middle as there are times in life when you need to seek the advice of a financial adviser.
Time Required: 3 minutes
Next month we will be launching the full "Grow it" phase which will look at how you can grow your wealth in the future.