This is a contributed post. Website T&Cs can be found here.
Cover photo by publicdomainpictures.net
This post is all about ways to cope with common financial problems – from unexpected or sudden death, to retirement worries. One of the tactics described is the emergency fund. I have talked at length already about the merits of having an emergency fund which you can find here:
This post also talks about other options you have when it comes to surviving financial disaster, be it working part-time in retirement to make your funds stretch just that little bit further, or setting up life insurance.
I hope it helps! Feel free to share with anyone who may find it useful.
A series of unfortunate events
Everything is hunky dory and then it happens – an unforeseen event. The problem with them is that they are almost impossible to predict.
Aside from stressing you out, or tearing at your heartstrings, they also cost money. In fact, the price may be very high depending on the scenario. If you struggle to afford the cost of living now, the idea of forking out for an unexpected event is usually something we like to bury our heads in the sand over.
“By failing to prepare, you are preparing to fail” – Benjamin Franklin
Where there’s a will, there’s a way though, and below are some suggested tactics to keep your finances in the black no matter what.
An emergency fund is an essential part of your financial shield! Although a situation can be unpredictable in costs, having an emergency fund means you should be able to cope without needing to resort to debt. There is always a chance though that the overall cost may be more than you have in your savings account, but still, it’s better to find some of the money, than to have to come up with the total amount. Even if you earn a modest salary, putting away a small amount each month does add up with persistence. If you’re UK-based, try an automatic savings app like plum. This app takes the thinking out of putting together a saving pot, and they offer the chance to invest too. Why not check it out?
Pay In Advance
Unfortunately, the only certainties in life are death and taxes. If an unexpected death occurs, funeral costs could catch a family off guard unless a plan is in place. Funeral costs are getting higher, and it is understandable why companies that offer pre-pay funeral costs, such as the co-operative funeral care group, are becoming more and more popular. According to the money advice service, the average cost of a burial with a funeral director is £4,257 – higher still if you live in London. With dwindling space for burials, this cost can only ever get higher still with time.
So BEWARE. All funeral plans have their own restrictions and nuances. Remember too that they might not cover every cost your family might need – indeed, it might not be enough at all. The money advice service and thisismoney.co.uk have very helpful guides for keeping the cost of funerals low, so read this first before committing to any pre-paid plans. It might be better to save up money into an account instead.
Life-insurance is an essential part of a good financial plan for the right people, at the right time. Unless you have the money waiting on standby, in the event of critical illness or death, an insurance policy can be a vital life-line for a family. The only time it is necessary to purchase life-insurance is if you have dependents who would suffer financially if you were no longer around – this includes both working and non-working partners.
If you’re single, and don’t have dependents, do not be led into thinking that you have to buy life insurance just because you’ve purchased your first home. Its a complete myth.
We all work hard to support ourselves and our families. Some of us live paycheck to paycheck, and the feeling can be uncomfortable – especially for the self-employed. Unfortunately, health issues may limit our ability to work, and in some cases, being ill may cause us to stop working all together.
That could mean retiring early with an insufficient nest egg. Should you have to quit earlier than expected, there is always part-time work. In fact, cutting down to three days a week is an enjoyable way to have a career and maintain your well-being. The other alternative could be to change the type of work that you do so it is less stressful or physically strenuous. Ask your current employer if either of these are possible should your health start to deteriorate.
Cut The Cord
Do you have investments? Ideally, putting money into investments is a one-way-valve until retirement. In certain situations though, there is no choice but to cash in your chips early and take the money.
Be warned. You shouldn’t take this decision lightly. Taking money out too soon for will ruin the compounding that’s building up within your cash. Successful investors have a series of rules that keeps them safe and profitable, and holding onto your investments, no matter what, is one of them. Spending your funds before they’re fully ready can put your future in serious jeopardy, so think before you leap!
If you want to keep in touch, I have a free Private Facebook Group you can join. We’re a supportive bunch of money-savvy women. Came and join in the discussion!
Come and Join the Money-Medics!
Every week I'll send you something inspiring, useful and fun related to our favourite m-word.....MONEY! I look forward to "meeting" you. Love, Dr Nikki x