Recent research has highlighted that approximately three quarters of all adults in the UK are worried about their finances. Additionally, 20% possess no savings at all, while around a third of British adults have no contingency plan in place. While this could leave households struggling, having a contingency plan could assist.
Benefits of a Back Up Plan
While you may never need a back-up plan, when it comes to your finances, it is a good idea to make sure you are in a strong position. This could help you in numerous ways:
- Should you lose your job, you can use these funds to pay for essential living costs, such as rent, bills and food
- Having savings could allow you to follow your passion or change your career path, something that could require taking a lower paid job
- Being in a stronger financial position could help to ease stress if you are injured or diagnosed with a serious illness
Essentially, having a back-up plan could help to provide financial stability. If you would like to set up your contingency plan, here are a few effective methods.
Consider an Insurance Policy
While you probably have insurance policies for your car and home, a personal insurance policy can provide cover in the event of accident, illness or job loss. These types of insurance can act as a contingency plan, by helping you to pay for your financial commitments such as the mortgage or loan repayments, as well as providing security for any dependents.
Build Your Savings
With so many British adults having no savings, in the event of job loss or accident, this could add to their stress and concerns. One way to combat this and build a financial cushion is by actively saving. There are many ways to do this, including automatic savings apps or creating a budget to help you cut back on unnecessary spending and live more frugally.
Pay off Your Debts
While clearing your debts may not provide a lump sum you can fall back on, it could ease financial pressures, should the worst happen. By paying off your debts you could reduce your monthly outgoings as well as improve your credit score, which in turn, could make it easier to access emergency funds, should this be something you require.
No matter which method you use for your back up plan, it could benefit yourself and your immediate family by providing financial security.