Feel Good Kit - Part 1 - Financial Fitness

Welcome to the first pillar of our Feel Good Kit: Financial Fitness. While money isn't everything, feeling in control of your finances is a cornerstone of a happy and fulfilling life. This guide isn't about becoming super-rich; it's about building confidence and removing the worry of how to afford the things you need and enjoy.

Money is simply a tool—a facilitator that you can use to build the life you want. No matter your current situation, you can always take small, simple steps to improve. This guide will walk you through a clear, five-step plan to get you started.

The action points for this Feel Good pillar are:

1. Know your Flow - Carry out a spending review and document income and living costs for current life and ideally a target lifestyle

2. Build a Safety net - Work to build up easy accessible (often termed liquid) savings of 3 months living costs

3. Pay Yourself First - Target saving 20% income every month

4. Update Knowledge - Read the two recommended books and learn how to make money work for you

5. Buy Assets - Build up savings in more liquid assets such as shares until you have sufficient to invest in assets closely aligned to your goals and lifestyle.

Tip #1 - Know your flow

Step 1: Know Your Flow (The Spending Review)

Before you can plan your future, you need to understand your present. The first step is to get a clear picture of your monthly income and expenses.

• Document Everything: Use a spreadsheet to track all your spending for a typical month. To make it easier, we have provided a simple template you can use. Some banking apps can also automatically categorise your spending for you, so check what your bank offers.

• Find Your Baseline: This exercise will show you the minimum income you need to live⁶. It will also help you identify where you can make changes.

• Essential vs. Flexible: Categorise your costs as "essential" (like rent and bills) and "flexible" (like subscriptions or eating out)⁷. The goal is to see where you can make small changes to start saving consistently each month.

Action: [Download our Living Cost Review Spreadsheet (XLSX)]  and spend 30 minutes filling it out.

Living cost review.xlsx

Download XLSX • 16KB

Tip #2 - Build Your Safety Net (The Emergency Fund)

Life is full of surprises. A safety net, or emergency fund, is a pot of money set aside for unexpected events, like a job change or an urgent repair. It's your foundation for financial freedom.

• Your First Goal: Aim to save enough to cover three months of your essential living costs. This amount provides a significant cushion to handle major events without stress.

  
  

• Keep it Accessible: This fund should be held in a high-interest, easy-access savings account. You need to be able to withdraw the money at any time without penalty. Look for instant-access savings accounts offered by major banks or building societies.

  
  

• The Confidence Boost: Having this "Freedom Fund" in place provides incredible peace of mind and empowers you to make better life decision.

• 
  

Action: Open a separate, easy-access savings account and name it "Emergency Fund."

Tip #3 - Pay Yourself First (Make Saving Automatic)

The most effective way to save is to make it a habit you don’t have to think about. This means treating your savings like any other essential bill.

• The 20% Target: A great goal is to save 20% of your income each month^. But if that's not possible right now, start with 10% or even 5%. Every bit counts.

• 
  

• Automate Your Savings: Set up a standing order to automatically transfer your savings from your current account to your savings account the day you get paid.

• Treat Savings as a Cost: By making this transfer automatic, you treat saving as a non-negotiable living cost.

• 
  

Action: Log in to your online banking and set up a monthly standing order to your savings account.

Tip #4 - Grow Your Knowledge

Your financial education is one of the most powerful investments you can make. The more you learn, the more confident you'll become.

• Practical UK Money Advice: The Money Saving Expert website, founded by Martin Lewis, is an outstanding resource for UK residents. Sign up for the free weekly email to get tips, deals, and financial guidance.

  
  

• Recommended Reading: To change the way you think about money, we highly recommend these two books:

  
  

  • Rich Dad Poor Dad by Robert Kiyosaki: A classic that explains the fundamental difference between assets and liabilities. (PDF download below)

    
    

  • Money Master the Game by Tony Robbins: A comprehensive guide with practical steps for long-term financial planning. (Provided at the property)

    
    

• Understand the Bigger Picture: To learn how the economy works in just 30 minutes, watch Ray Dalio's excellent video, "How The Economic Machine Works".

  
  

Action: Sign up for the Money Saving Expert newsletter and choose one book or the video to start with this month.

RICH-DAD-POOR-DAD.pdf

Download PDF • 796KB

Alongside this, if you don’t already then we recommend checking out the “Money Saving Expert” website and signing up for their excellent emails. The founder, Martin Lewis, works tirelessly to provide great info and deal to enable us get more out of our money.

Tip #5 - Build for the Future (An Introduction to Investing)

Once you have built your safety net and automated your savings, you can start thinking about making your money work for you. The goal of investing is to outpace inflation and build real wealth over the long term.

This is an advanced step, and it's important to do your own research. The following is high-level guidance, not financial advice. We provide more in Financial Fitness Part 2.

• What are Assets? An asset is something that puts money in your pocket over time. This can include things like shares in companies or property.

  
  

• An Accessible Starting Point: For most people in the UK, a Stocks and Shares NISA (or ISA) is a great place to start. It’s a tax-efficient account that allows you to invest your money. Platforms like Hargreaves Lansdown or Halifax offer these accounts.

  
  

• Simple Investing: A common starting point within an ISA is an index fund. This type of investment spreads your money across many large companies (like the FTSE 100), which diversifies your risk.

  
  

Action: Once your emergency fund is in place, your action is to research Stocks and Shares ISAs to understand how they work.

Summary Points

Financial fitness is a marathon, not a sprint. The goal is to take consistent steps, no matter how small.

Review your financial plan every quarter to make sure you're on track, and adjust it as your life changes. By consistently saving and investing in a way that supports your lifestyle goals, you can build a secure and fulfilling future.

Now check out Pillar 2 or finance Part 2.