However, those of us who work on a self-employed basis or short-term contract need to take particular care.
Jerry, 30, single but in a relationship, is an IT contractor who rents in London and commands a good income [circa £75,000] pa with relatively stable job prospects.
He is having fun but is keen to put some of his income to work, as the longer-term plan is to marry and have children. He is aware that he needs to think about his retirement and his colleagues have advised him it is never too early to start putting money to work.
Given the current low interest rates on savings products, he is considering investing and has enjoyed dabbling in share trading.
Kerry Nelson (pictured), managing director of Nexus IFA, says that Jerry’s self-employed status makes his situation more complex and this is something he has to keep in mind through all his financial planning.
"The first thing is short-term cash: with the nature of what he does, although he has some stability, you do not know when the rug will be pulled from under you, so you should aim to have three to six months in cash."
Nelson explains that Jerry should also set up a bank account to hold the money he is likely to owe in cash, explaining that it is far easier to set aside the money regularly through the tax year than do it all in a panic at the end.
"For the medium-term, he should be looking to maximise his ISA allowance," she added. "I would suggest a comfortable sum he can afford on a monthly basis to get used to the regularity and discipline of saving."
Nelson explains that in the current market environment, any monthly savings plan will benefit from market volatility thanks to the benefits of pound/cost averaging.
Studies suggest that drip-feeding your money into the markets gives better results over the longer term.
Chris Spear (pictured), managing director at Spear Financial, says that Jerry needs to decide how to fund starting a family.
"I suspect that still being relatively young and with plans to start a family, his mind will turn to buying a house and the cost of kids – I know, I have four," he said. "We have to consider building up a house-buying pot and family pot. For this I would use cash ISAs (as poor as they are at present, but at least they are safe) and stocks and shares ISAs. We need to keep things fairly simple, there's no need to over-complicate things."
"I might look at a fund supermarket such as Fidelity FundsNetwork or a wrap such as Standard Life."
"Fidelity offers a low-cost pension and a good stocks and shares ISA. Standard Life also offers both, with the added bonus of a reasonable interest-paying cash account and a cash ISA."
Nelson says that saving for a pension is particularly important for Jerry given his self-employed status.
This means that he will not have the option of a workplace pension that all employees will have to be offered in future and will be entirely dependent on what he can save himself.
"He should be saving an amount on a monthly basis that is affordable and then at the end of the year should top up his pot with whatever he can afford and cut his tax bill in the same way," Nelson added.
Spear says that it would be prudent to save £500 net of tax relief into a pension each month, but he thinks that Jerry has more pressing concerns.
"I am not a great fan of pensions as you are tying up your money to at least age 55 and you have limited flexibility," he explained.
"However, Jerry is a higher-rate tax payer. We know that if he uses a pension he will get 40 per cent tax relief. That is the attraction of using a pension."
"He would have to contribute a sizeable amount into a pension if he really wants to reduce his tax liability."
Nelson is less keen on Jerry’s taste for dabbling in shares.
"He should concentrate on the basics before dabbling," she said. "He wants some structure to be able to take the losses."
"Whilst he wants to enjoy his life and have fun, he is almost self-employed and has to factor this in to all the things I have said. He needs to be making contributions towards a deposit for a house and he should explore the Help to Buy scheme."
She points out that because he is self-employed, the bank will want to see evidence of two to three years at a consistent level of earnings to give him a mortgage."
"Lenders are rubbish right now for everyone, but if you are self-employed, it’s even worse."
Spear suggests Liontrust UK Special Situations, Henderson European Focus, JO Hambro UK Dynamic, Standard Life Global Smaller Companies and Baillie Gifford Japanese as funds that could suit a novice investor.
