In a world where interest rates and the cost of living are as unpredictable as tomorrow’s weather, how can you prepare for the unexpected? By building financial resilience, brick by brick.
Here are some key things to think about.
What does ‘financial resilience’ mean?
During the pandemic, everyone started talking about financial resilience – with good reason. And while Covid-19 itself seems to be largely under control, with all that’s happening in the economy, we can’t say we’re out of the woods yet.
That’s why financial resilience continues to be a good mantra. It’s about being able to withstand and bounce back from economic hardships, whether that’s losing a job, facing unexpected expenses, or more. It means having a holistic plan that combines saving and protecting your income.
The first building block: emergency funds
When you’re already juggling bills, your rent or mortgage, and other necessities, setting aside extra cash may seem impractical, to say the least. However, a good-sized emergency fund is your first line of defence against financial curveballs.
Even small, consistent contributions can add up over time and provide a significant cushion when you need it most. And importantly, depending on how big your rainy-day fund is, it may allow you to increase the excess or waiting period on your insurance, potentially reducing ongoing costs.
Safeguarding your biggest expenses
An emergency fund can help, but in the longer run, it’s highly unlikely to be enough for big ongoing expenses like mortgage repayments. To prevent a serious illness, accident or worse from putting your home at risk, protecting your ability to repay the mortgage is essential.
Protecting your physical and financial health
No one likes to think about being diagnosed with a severe illness like cancer or heart disease. Once again, your emergency fund might cover immediate expenses, but what about the ongoing treatments and possibly the time you might need off work?
This is where trauma insurance (also known as Critical Illness Cover) comes in handy. This policy pays out a tax-free lump sum if you’re diagnosed with one of the qualifying medical conditions listed in the policy. And you can use this sum as you see fit – for example for treatment, to pay debts, or to replace lost income.
Insuring your business reputation and financial future
When it comes to running a business, even a simple mistake can lead to complex legal battles. If you own your business, you're not just responsible for yourself but also for the well-being and safety of your clients and customers.
Public liability insurance can provide cover against legal claims for injuries or property damage you may inadvertently cause during your business operations. Professional indemnity insurance can protect you if you're sued for negligently performing your professional services. These insurance types are designed to protect your business reputation and financial future.
Like to find appropriate cover for your business needs? Our handy quote compare tool here is a good place to start.
Safeguarding your house and its contents
The recent spate of extreme weather events, like cyclone Gabrielle in early 2023, reminds us of the importance of protecting our homes. Accidents and natural disasters can happen at any time, and unfortunately, they can have significant financial consequences.
House insurance covers the building, and you can also add contents insurance to protect your prized possessions inside it. Or you can take out contents insurance on its own (for example, if you’re renting your home). From accidental damage like a kitchen fire to the impacts of disruptive weather events, the house and contents insurance payout can allow you to rebuild and replace without having to pay the full cost out of your pocket (apart from the excess).
Looking for house and contents cover? Click here to get quotes and – if you find what you’re looking for – apply.
Resilience = preparedness
The steps you take today can determine your ability to weather whatever storms tomorrow may bring. So, make sure you consider your options – and consider the types of insurance that align with your lifestyle and needs. Top of Form
And always remember, we’re here to help.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.