How to improve your financial resilience?

EXPECTED READ TIME: 2 MINUTES

According to our 2021 Financial Resilience Report, 38% of respondents said they would not be able to cope financially in the case of a relationship breakdown, unemployment or sickness.

To help build your financial resilience, here are some small and manageable changes you can make today to help prepare you for your financial future.

Budget planning

  • To fully understand your financial situation, make a list of your regular monthly incomings and outgoings.
  • Use our free budget planning tool to create a budget for one month.
  • This will give you a better picture of your financial situation and help you to prioritise spending.
  • Go back to your budget at the end of the month and assess how well it worked.

A budget doesn’t have to be a fixed contract you are stuck with for life. Budgets should be flexible and ever-changing in the same way our spending habits are.

Cut unnecessary spending

  • After creating your budget, you will have a better understanding of your monthly income and expenditure.
  • Are there things you are paying for every month which you wouldn’t miss? The gym membership you haven’t used for months or a bus or train pass when you are home working?
  • By cutting out unnecessary costs, you will have more disposable income which can be used to either supplement your spending or used to save.

Everyone has costs which they could live without. Is there anything you can think of right now which you could cut out and benefit from the additional income?

Checking your credit score

  • There may be a time when your savings alone are not enough to assist you in difficult situations.
  • Loans with low interest rates allow you to deal with the situation with manageable instalments.
  • However, individuals with a low credit score may find it difficult to get a reasonable loan.
  • By using free credit score sites, you can find where you stand with monthly reports.

By keeping up with your repayments, your credit score can improve and so too do your options for borrowing. It also means you are more likely be able to borrow more if you need to.

Saving regularly

  • Your disposable income is your remaining monthly earnings after expenses have been paid. This is what you use to buy your ‘wants’.
  • However, before you splash out on any luxury items, it is important to put some aside and save.
  • When your money is being saved in a separate account, it is not only less tempting to dip into, but it grows over time.

At this credit union, we pay our members an annual dividend to reward them for saving regularly, making their money go further when they need it in the future.

  • The information provided in this article is for guidance and educational purposes only. Police Credit Union Ltd. does not offer regulated financial advice. Please seek independent financial advice.

Related content

What does it mean to be financially resilient?

Download our Financial Resilience Report 2021

Watch our Financial Resilience YouTube video!

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