No one knows when and where the next financial shock will come from – major events such as we have just experienced from Covid-19, illness or injury, redundancy or a significant change in your circumstances can happen any time.
While you can’t predict when these shocks will happen, you can prepare for them.
In times like these having something to fall back on through cash reserves or savings, extra home equity and insurance can make the difference between coping comfortably or entering survival mode.
During lockdown we soon learnt what was important - our health, food basics such as milk and bread and home utilities such as electricity and internet. We also learnt what was nice to have but non-essential such as takeaways, the latest gadgets and new clothes.
The old adage ‘make hay while the sun shines’ is relevant now more than ever.
If your income or financial situation is unchanged after the Covid-19 related lockdown, now is a great time to build your war chest for the next rainy day and lock in those savings habits which were forced to change during lockdown.
If you don’t already use a budget to help manage your spending, some great resources are available on the Sorted website. Make a plan to increase your savings, ideally to work towards holding three months living expenses in reserve to act as a cushion for the next financial shock. Work towards accelerating your debt reduction, arrange a meeting with your bank or broker to discuss further. Review your insurances to make sure your life and your lifestyle are covered for any major health issues or events. You can contact us for a free review of these at any time.
During times of financial uncertainty, planning ahead especially around any new financial commitments and being smart with your spending are more important than ever.