No one knows what tomorrow will bring or what is in store for us. Life throws the good and the bad our way. Anything good is welcome, but inevitably the bad will roll around sometime too. When that happens there is not much we can do. We can, however, prepare for sudden life changes and put things into place that will help us at a difficult time. When there are sudden and unexpected life changes, your finances may be materially affected as a result. At Plutus we can help you navigate the rougher waters. If you are concerned about securing your finances, please get in touch with one of our independent financial advisers at www.plutuswealth.com for a more detailed conversation.
Redundancy and unemployment, illness and disability, or even sudden death could happen when we least expect it. We look at how sudden life changes can affect your finances and what financial plans you can put in place now. This way, you can be as financially secure as possible, and you and your loved ones are cared for should something happen.
Redundancy and unemployment
The loss of a job or business has been brought into stark reality over the past year. Covid-19 has had a significant impact on unemployment figures and economic output – as demonstrated in the Guardian’s recent analysis. There were almost 10 million people on furlough at one time or another and unemployment has increased significantly since March 2020.
Being out of work can have a considerable effect on your family’s finances. This is more severe if your family is relying on one salary. From being able to pay the bills and put food on the table, longer-term implications could also include paying into a pension and the loss of employer contributions. There are a few steps you can take to reduce the impact of redundancy and unemployment, including:
- Take out insurance cover. This can be to protect you from loss of income or to cover your mortgage payments. Find out more about the types of insurance available in our Insurance Series article.
- Set up savings and/or investment accounts that you can access should you need to. Our Plutus advisors can assist with finding the right solution for your circumstances.
- Claim any redundancy pay owed to you by your former employer. If the company has gone bust, you may be able to claim that from the government.
- Check whether you can claim any benefits. This will help tide you over until you find new employment by covering essential costs.
Illness and disability
Accidents and disability can happen in the blink of an eye. Illness can be diagnosed when you least expect it, and at worst can be a long-term condition. It is unlikely that you can work during periods of serious illness and you may not be able to work as you did before due to a new disability. A few things you can do include:
- Check your insurance cover. As well as income and mortgage protection mentioned above, there is also critical illness insurance. Your employer may also have critical illness or disability cover that you can access if that is one of the available benefits.
- Put a savings or investment plan in place. This will enable you to put money aside that you can dip into in an emergency.
- Have a budget to help identify where you can cut back on spending if necessary. This can help you see at a glance where you can make cutbacks or renegotiate repayments.
- Rationalise your debts. Pay off those that are a priority, such as your mortgage and utility bills. Others, such as credit cards or loans can be renegotiated with lenders. This way you are not overstretched at a difficult time.
- Take advantage of any Statutory Sick Pay entitlements if you are employed and qualify. If you are self-employed you may need to rely on state benefits and your own savings.
Death is difficult at any time, but a sudden death can have life-changing consequences for those left behind. Not only are you dealing with the loss of a loved one, but with a potential loss of income if they have been contributing to family finances. To help mitigate those effects, particularly at a time when you or your loved ones are grieving, consider the following:
- Have insurance cover that pays out in the event of your death. There are two main options, life assurance (or whole-of-life insurance) and fixed-period insurance cover. Our article covers the two options in more detail to help you decide which is best for you. Another consideration is putting your life insurance into trust. There are numerous benefits to doing this, including reducing your inheritance tax bill and having greater control over who your money goes to.
- Create a will. Estate planning is critical to ensure your loved ones are looked after and it can even help you save money now. Start by finding out more about inheritance tax and the benefits of putting plans in place now.
- Have a savings plan. As well as dealing with the day-to-day costs, there are also funeral expenses to consider. Having savings put away for such eventualities can help soften the financial blow. Alternatively, some insurance policies may cover funeral costs, so it is worth checking whether yours does.
Help to deal with the unexpected
When the worst happens, you are never alone. We can offer a helping hand now so that you are as prepared as can be for what life throws at you. Talk to our Plutus Wealth team of experienced independent financial advisers to discuss how to put plans in place today. Call us on 020 7871 5200 or write to us at email@example.com to make an appointment.