Posted on: 16 October 2020
The COVID-19 crisis has affected all our lives in ways it would have been hard to imagine a year ago. It’s a reminder to all of us to ‘expect the best, prepare for the worst.’
People have seen their finances fluctuate as some have been furloughed or had their hours reduced, while others have ended up saving money due to spending less on commuting or going out. Many workers now say they are taking measures to ensure they improve their financial situation, so they are better able to withstand any future crises.
Here are five steps to take now to help safeguard your financial future.
Any push to improve your financial situation will need to include budgeting. This helps you see how much you’re currently spending on different things, how much you should be spending, and how much you’d like to be saving – as well as a list of solutions to looming issues.
If you’ve never made a budget before, try reading our article on Budgeting for Beginners. Once created, put your budget somewhere visible like the fridge door to help you stick to it.
Pay off debt first
It depends on your personal circumstances, but it’s often better to clear any outstanding debts before you try to save. As a rule, start by reducing any debts on store cards and credit cards and then tackling your overdraft. Check what interest rate each is charging and start with the most expensive.
Once you’re able to save, treat savings as another bill that has to be paid, rather than an optional extra if you have money left over at the end of the month (because when does that ever happen?)
Build up an emergency fund
It’s a good idea to have enough in a rainy-day fund to cover your household expenses for three to six months. You’ll have this to fall back on should you find yourself out of work, face an income cut, or have to deal with unexpected costs.
Use your budget to work out the total you’re aiming for, and how much you can afford to put away each month. Even a small amount will help. This money should be available immediately, so put it in an easy-access cash account rather than one where access to the money is restricted.
Cover for unexpected events
It’s important to ensure that you and your dependents are provided for if you became unwell and had to take time off work or, if the worst happens, and you sadly pass away. It’s not easy to think about but planning for these situations can make a significant difference to loved ones.
Personal Group provides fair-deal insurance products that provide peace of mind should the unexpected happen. We’ve been providing our affordable and straightforward plans for over 35 years, covering hospital treatment, convalescence, and death benefit.
Speak to your employer should you wish to find out more about our plans.
People often feel disengaged from their pension because it seems like a long way off or they find the subject too complex. But by not saving for the future, you may be forced to work in your retirement years, or risk running out of money later in life.
No matter how old you are, it’s never too late to start putting money aside. Get started with our article on planning for retirement.
No one can predict the future but having a plan and sticking to it will make you feel calmer and more in control of your finances. Taking action now is the best way to protect yourself against future financial shocks.