The last couple of years have been tough for millions of households across the UK. Soaring energy bills have sent the cost of gas and electricity to record highs, while rampant inflation – particularly for things like food – has likely seen your expenditure rise sharply.

On top of this, the base interest rate has risen from 0.1% to more than 5% in less than two years. This has pushed up mortgage costs for many homeowners – indeed, the Office for National Statistics (ONS) reports that the monthly cost of a new mortgage for the average semi-detached house in the UK rose by 61% in the year to December 2022.

So, if you’ve been hit by rising fuel prices, energy bills, or mortgage payments or the cost of your weekly shop has increased, you may have spent the last few months in an increased state of worry about your finances.

If so, you’re not alone.

New research reported by Mortgage Introducer has revealed that more than 2 in 3 adults (69%) are concerned about their finances, with more than a third of these (35%) admitting that they did not feel resilient in supporting themselves or their families financially. 

Worrying about your finances can damage both your emotional and physical wellbeing. So, to help you tackle your money worries, here are three steps you can take to build your financial resilience.

1. Put the right protection in place

Many households in the UK are just about getting by from month to month. Citizens Advice reports that 1 in 4 people in the UK (27%) are currently behind on at least one bill.

Would you be able to maintain your mortgage or rent payments and your other essential bills if you couldn’t work due to illness or injury?

Mortgage Introducer reports that more than half of adults (55%) are worried about losing money should they fall ill and be unable to work.

Even if this was the case, however, there were very few who had put appropriate protection in place to help in this eventuality:

  • Just 10% had income protection
  • Just 12% had Critical Illness cover
  • Only 1 in 4 (27%) had any life insurance.

Protection is one of the key foundation stones of a solid financial plan. Knowing that you’d receive vital financial support if the unexpected happens can give you and your loved ones real peace of mind. 

  • Income protection pays a monthly income if you’re unable to work due to ill health, accident, or injury. It ensures that part of your salary comes to you every month until you’re fit enough to go back to work, helping you to maintain your regular outgoings.
  • Critical Illness cover pays a tax-free lump sum if you’re diagnosed with a serious medical condition, such as cancer, a heart attack, a stroke, or conditions like Parkinson’s disease or multiple sclerosis. You can use the lump sum to repay debts, replace income, or to adapt your home.
  • Life insurance ensures that your loved ones receive a tax-free lump sum (or income) if you die prematurely. It can help them to remain in the family home, maintain their lifestyle, and pay for regular and one-off expenses.

Without the right protection, you and your family don’t have a safety net if an unexpected event occurs. 

The BBC reports that sick days in the UK have reached a 10-year high, with staff taking an average of 7.8 sick days in the past year. If you’re off work for an extended period, your employer might not pay full pay, and you could end up on Statutory Sick Pay (SSP) which is in 2023/24, just £109.40 a week.

Spending just a few pounds a month on protection can help you to build real financial resilience, and you can sleep easier knowing there will be financial support in place – whatever happens.

2. Build up an emergency fund

According to figures from the Money and Pensions Service:

  • 9 million people across the UK have no savings
  • A quarter of adults have less than £100 put away.

The study from Mortgage Introducer reveals that 70% of employees said that they worried about their financial situation despite having full-time jobs. Furthermore, 28% of workers also said that they may not be able to cover a month’s worth of expenses should they fall ill and be unable to work. 

A third (34%) of part-time employees shared the same sentiment of being unable to fulfil financial obligations if they got sick, as well as 30% of gig-economy workers.

Building up an emergency fund that you can dip into when you need to can help you to become more financially secure and reduce your stress levels.

Having this rainy day money that you can dip into if your car breaks down, you need to make urgent home repairs, or you have a short period out of work means you don’t have to turn to expensive credit to pay these bills.

Experts suggest that you should try and retain between three and six months’ worth of expenses in an easy access savings account. If you’re self-employed, or you work in an uncertain industry, you may want to save more.

A Cash ISA can be a useful place to keep this fund. You can save up to £20,000 in a Cash ISA in the 2023/24 tax year, and any interest you receive is paid free of Income Tax and Capital Gains Tax.

Most Cash ISAs also let you access your savings when you need them – ideal if you need to get hold of your money in a pinch.

3. Make sure you’re getting the best deals

The rising cost of living has also had an impact on homeowners, with 43% of people expressing their worries about being able to pay their mortgage. Of those surveyed, a third (33%) said that they did not feel that they were financially resilient. 

Mortgage rates have risen sharply in recent months, as has the cost of other insurance. Indeed, City AM reports that the price of car insurance has recently hit a record high.

Shopping around for deals can help you to ensure that your finances are in good shape:

  • If your mortgage deal is coming to an end, start looking around for a new deal up to six months ahead. Speak to a mortgage broker or other expert to find out what the most competitive deals are for you.
  • Always compare the cost of things like car, home, and pet insurance before you renew with your existing provider. You can often save a considerable sum by switching to a new provider.
  • Check how much you’re paying for your protection. If your health hasn’t changed since you took out your life insurance, there may be cheaper options out there that could cut the cost of your cover. Use our free online life insurance quote service to compare prices.

Being proactive when it comes to your regular outgoings can help you to keep your costs down, reducing your financial worries in the process.

We’ll help you to find the right protection at the right price

As life insurance and Critical Illness cover experts, we can help you to build your financial resilience by putting the right protection in place.

This valuable safety net can provide vital financial support when you and your family need it – so get a life insurance quote or a Critical Illness cover quote today to find out just how inexpensive cover can be.