š° What Should I Do With My Money?
A step-by-step guide to UK personal finance priorities
Do you spend less than you earn?
Why this matters: If you're spending more than you earn, you're going into debt. This is the foundation - everything else comes after.
Do you have any high-interest debt?
High-interest debt includes: Credit cards, payday loans, overdrafts, buy-now-pay-later schemes (Klarna, Clearpay). Basically anything over 10% interest.
Do you have at least Ā£1,000 saved as an emergency fund?
Why Ā£1,000? This covers most unexpected expenses - boiler breaks, car repair, vet bill. It stops you going into debt when life happens.
Are you getting your full employer pension match?
This is free money! If your employer matches pension contributions (e.g., they put in 5% if you put in 5%), you MUST do this. It's an instant 100% return.
Do you have any other debt above 4-5% interest?
Examples: Car finance, personal loans, student loan (Plan 1 or 2 if earning well), 0% credit card deals that are ending soon.
Do you have 3-6 months of essential expenses saved?
Calculate it: Add up rent/mortgage, bills, food, transport, minimum debt payments. Multiply by 3-6 months. This is your safety net if you lose your job or get ill.
Do you have any major purchases coming up in the next 5 years?
Examples: House deposit, wedding, car, holiday, home renovations. If you need the money within 5 years, you shouldn't invest it in stocks.
Are you maxing out your pension contributions?
The limit: You can put up to Ā£60,000/year into a pension (or 100% of your salary, whichever is lower). You get 20-45% tax relief depending on your tax bracket.
Are you using your Ā£20,000 ISA allowance?
ISAs are tax-free: You can put Ā£20,000/year into ISAs (Cash ISA, Stocks & Shares ISA, Lifetime ISA). Any growth or interest is completely tax-free.