Financial wellbeing starts with understanding where you stand. This article explores why avoiding your finances can be costly and outlines simple steps to gain confidence and take control of your money.

Two things are non-negotiable for your well-being: health and money. Yet, research shows many of us practice selective attention with these topics. It's called the “ostrich effect,” where people pay selective attention to information. In other words, people chase good news and may run from bad news. Our brain tells us to avoid things that may be painful, unpleasant, or scary.

Sound familiar? Like ignoring that credit card bill or skipping the bank app after a big weekend? You’re not alone.

But here’s the hard truth: ignoring your finances doesn’t make them better. Facing the numbers is the first step to creating a secure, stress-free future.

Step 1: Take Stock of Your Situation

Before you start investing, you need to know where you stand. Think of it as a financial health check. Ask yourself:

💰 Do you have a savings account? What’s in it?
📈 Does your job offer a pension? How much is in it?
🏡 Do you own assets like a car or home? What are they worth?
💳 How much debt do you have?
📊 What are your monthly expenses? Can you track them all?

Answering these questions gives you the foundation to start your investing journey, so that you can properly set your goals, grow your wealth, and reach financial independence.

You don’t need all the answers right away—just start. The aim here is clarity, not perfection.

Step 2: Know Your Why

As with most things in life, you need to understand your why. This is especially important because investing means you’re foregoing money now to benefit your future self. What goals are you working toward? A dream vacation? Buying a home? Retiring early? Whatever they are, get clear on them and remind yourself why you’re making these sacrifices. Your "why" will keep you motivated when it feels tough to stick with the plan.

Step 3: Know Your Risk Appetite

Investing is about balancing risk and reward. Every investment comes with some uncertainty, but your personal risk tolerance depends on your goals, timeline, and situation. In finance, risk refers to uncertainty, or the potential loss of money from an investment decision.

If you’re in your 20s, with fewer financial commitments, you might tolerate more risk for long-term growth.
If you’re closer to retirement, juggling kids, a mortgage, or big expenses, you might prefer lower-risk options.

Here’s a tip: the longer your timeline, the more risk you can handle. Markets may dip short-term but tend to grow long-term. That being said, everyone’s risk appetite is different – it's not one-size-fits-all. The important thing is to know what yours is before you start investing. One thing to note, it can change over time as you get more comfortable and confident.

Step 4: Take Action and Start Small

Once you understand your own level of risk tolerance, it’s time to take action and invest! Different securities come with varying risks:

Lower-Risk Options: Index funds, ETFs, and mutual funds. These are diversified and designed for long-term growth. For instance, consider investing £50 monthly into a global ETF tracker. Figure out what a a manageable amount and cadence for you and your situation looks like and then start a simple, lower-risk way to let my money grow over time.
Higher Risk Options: Individual stocks. These can yield high rewards but come with more volatility; that’s what people describe the ups and downs that happen in the stock market. A quick buy of Mattel Inc shares (the company that manufactures Barbies) during the Barbie movie craze? Let’s just say the first days were looking good and then it didn’t pan out! Investing in single stocks is more risky, and can be time-intensive.

Remember: diversification reduces risk, so spreading your money across funds or sectors can make investing less daunting.

Step 5: Open an investment account

You don’t need a fortune to start investing. Whether it’s £10 or £100, the key is starting. Over time, compounding does the heavy lifting, helping your money grow exponentially the longer it’s invested. And remember to check out the right products that align to your goals – tax efficient investment accounts for medium- and shorter-term goals or a pension for retirement. A general investment account for those who’ve managed to fill up their tax efficient investment accounts and pension allowance and still have money left over.

The Bottom Line:

Ignorance isn’t bliss — it’s expensive. Facing your finances today sets you up for a secure, confident future. Gather your info, know your goals, understand your risk, and start small. The earlier you start, the greater your wealth-building potential. Remember – investing is not just something for people with thousands or millions in their bank accounts. You can start with as little as £10 because – and here’s the best part – it’s meant to grow!

Your wealth workout begins now. Are you in? 🚀

Your Money PT is here to teach and guide you. Download Aila to learn how to get started investing. You don’t have to do this alone.

Thank you to Caroline Teare for contributing this blog. 🫶💫

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Is Ignorance Really Bliss? Not When It Comes to Your Finances.