Updated: Apr 21
"In this world, nothing is certain except death and taxes."
Those are the famous words of Benjamin Franklin, and the last few years have really hammered home that message.
In early 2020, nobody foresaw a global pandemic that would bring life as we knew it to a grinding halt. Just a few weeks ago, the people of Ukraine could not have envisaged their lives being ripped apart by the abhorrent acts of war carried out by Russia.
But those events have shown we never truly know what is just around the corner – emphasising the need to create a plan in case the worst happens.
Possible lifestyle changes
Unless you are a clairvoyant, you cannot possibly predict the events of tomorrow. You could lose your job and income due to redundancy, or there’s a possibility you could be demoted and hit with a wage decrease. Perhaps you may become ill and have a sudden increase in expenditure, such as care fees.
There could even by a system failure when being paid, for example a SWIFT outage.
We hope that none of the above happens to you, of course we don’t. But it is better to be safe than sorry. Creating a rainy-day fund, putting funds away now, can protect you and your family should the worst happen.
Planning for the worst
There’s current market volatility for a variety of issues. From Brexit to inflation and the war between Russia and Ukraine. Unfortunately, due to this volatility you may lose money. Therefore, by putting money away, you ensure you have a strong alternative stored away in case the worst does strike.
It can also be accessed quickly in case of an emergency, and building private wealth also reduces the reliance upon external agents, such as the state pension, for income and savings.
Best methods for creating a fund
Commonly an emergency fund is normally between 3-6 months regular expenditure. This money should be ‘easy-access’, so not invested in assets that would have penalties / loss of interest on access. This should be held in either a Bank Account, Savings Account, or Premium Bonds.
Make sure you and your family are protected. You wouldn’t wait for a fire to occur before making sure your smoke alarm worked. Planning for the unexpected means you will be prepared and ready to respond to whatever situation is being thrown at you. Swim to the top, don’t sink.
Speak to your life stage team, for more help with creating a fund.
The articles are for information only and should not be construed as advice or a recommendation. Please seek independent financial advice before taking any action.