Saving and investing is about putting plans in place for your long-term goals whilst making sure you have enough money set aside to cover your day-to-day living expenses; one-off payments, like holidays, and any emergency costs - perhaps for your car, home or health.
There are many ways that you can save or invest, and while we all want our money to grow, it's important to think about the level of risk you might be willing to take with your hard-earned cash. It's about achieving a good balance.
It's often a good idea to think about putting your money into different types of assets to help balance the risk.
You could decide to save a manageable amount each month from your take home pay to cover your living costs, larger expenses and the unexpected.
A bank or building society account may be a good home for your money, or you could open up an easy access Cash ISA (Individual Savings Account).
A Cash ISA is a savings account that allows you to make regular contributions. Unlike a standard savings account, you won't pay any tax on the interest earned within your Cash ISA.
The other main difference between a Cash ISA and a standard savings account is that there is a maximum amount you can pay each tax year into a Cash ISA.
A Stocks and Shares ISA differs from its Cash equivalent by allowing you to invest in:
A fund is when investors pool their money together to buy a various range of assets such as bonds, shares and property. If you have a Stocks and Shares ISA, you can usually select different funds to invest in, plus move your money between these without taking it out of your ISA and losing the tax advantages.
Please note that the value of an investment can go down as well as up and you may not get back the amount you put in.
With both types of ISA, a wrapper surrounds your money to help shield it from tax. Each tax year you will receive a new ISA allowance which can be held in cash or stocks & shares, or a combination of both, in any way you wish.
Of course, the above are just examples. You could decide to choose different amounts, depending on the level of risk you are comfortable with, as long as you do not exceed the maximum ISA allowance for the current tax year.
Finally, you can also start an ISA with a single lump sum and not contribute anything else. Alternatively, you can begin with the single lump sum and at the same time start a regular monthly investment. The choice is yours.
When you have enough easy access savings set aside, you may wish to consider investing your money over the longer term, say five to 10 years or more, to help achieve your future goals.
Investing in other assets, such as stocks and shares, government and corporate bonds or property gives you the potential to achieve better returns than money in the bank.
However, please remember that there is no guarantee as the value of any investment can go down as well as up, so you may not get back the amount you put in.
So in addition to ISAs, you could invest in:
Corporate and government bonds - these are loans to the government or private companies that pay you interest.
Investment bonds - these are products which invest your money with the aim of providing you with medium-to long-term returns.
Open-ended investment companies (OEICs) - here your money is held in a pooled fund that is then invested in other funds and assets.
Property - you could invest in rental properties, commercial properties or holiday homes.
Shares - these are a direct investment in individual companies, where you take a stake and if it does well, you may get a dividend - a share in the profits.
It's often a good idea to put your money into different types of assets to help balance the risk. So if one doesn't perform well, another may do better. Or you could choose a fund which does this kind of balancing for you, sometimes known as a Managed Fund. Different types of assets can have different risks that need to be taken into consideration when choosing an investment.
Speaking to a financial adviser can help if you're not sure about what type of investments would suit you best.
The above is based on our understanding of current tax legislation and HM Revenue & Customs practice, both of which may change without notice. The impact of taxation (and any tax relief) depends on individual circumstances.