Even if you're doing your best to be responsible with your cash, there are plenty of forces outside of your control that can pose a threat to your financial stability. Rather than allowing the thought of personal finance nightmares to keep you awake at night, take these proactive steps to make sure you're prepared.

The nightmare: You can't get a loan when you need one

How to sleep easier: If you maintain a good credit score, you’re more likely to find it easier to get a loan for a car or a house (as long as you can afford the payments). You can read about credit scores and how to find out what your credit score is on the Money Advice Service website. If you have less-than-perfect credit, start taking steps to fix it. First, set up your bank account to automatically make the minimum payments on all of your outstanding debts, including credit cards and student loans. That way your score won’t be damaged by an accidental late or missed payment.

Then, set to work methodically paying down the debt to reduce the amount of overall credit you're using (and boost your credit score). If you have extra cash, put that towards an extra payment on the debt with the highest interest rate. Once that debt is paid off, take any extra cash along with the money that was going towards that payment and move on to the account with the next-highest interest rate.

The nightmare: You lose your job

How to sleep easier: The most immediate financial problem when you lose your job is that even though your salary stops, the bills don't. Even in a strong economy, it’s not uncommon to find yourself out of work for a period of time. Prepare yourself for these times by setting aside some money in an emergency account to help tide you over until you get a new job. Aim to eventually have three to six months' worth of expenses saved up. And keep it in a separate account, so you won’t be tempted to tap into it for everyday spending.

In addition to preparing your finances for a potential job loss, it's also important to make sure that you're set up to easily find your next role. That means making sure that your CV is always up-to-date and you are pushing yourself to attend networking events and connect with peers even when you’re happily employed.

The nightmare: The state pension age is increased - again

In announcing further rises to the state pension age - from 67 to 68 in 2037–39, seven years sooner than is currently legislated for - the Government repeated the case laid out by Sir John Cridland for why such rises are necessary.

The change means that anyone born in the period 6 April 1970 to 5 April 1978 will have to wait longer for their state pension.

Our ageing population means that, with no action, the amount we spend supporting people after work is going to rise dramatically, from 5.2% of GDP to 6.2% by 2037. If applied today, that would mean £725 of extra funding would be needed each year from every household in the country.

This is why it is essential that you contribute as much as you can to your workplace pension scheme. Who knows what age the state retirement age could rise to and how much eligible retirees will eventually get.

Being 68 years old in 2037 is not the same as being 68 in 1948, when the modern state pension was introduced. By the Government’s own figures, someone entering retirement back then could expect to live 23% of their adult life in retirement. By 2007 this had risen to 32% and for many will be far higher and much of that time will be lived in good physical health.

We’re living longer and so making provision for our own futures is crucial. Check you are getting the maximum contributions from your employer; most employers match the employee's contributions up to a certain percentage and is in most employers match the employee's contributions up to a certain percentage and is a key benefit of working for an employer. You might even be able to increase your contribution - see how even a small increase today can make a big difference to your pension pot tomorrow with our tool.

While it's impossible to fully prepare for every financial nightmare, making a few small moves now is the best way to make such situations slightly less frightening. After all, there are plenty of other scary things out there that can keep you up at night; your finances shouldn't be one of them.

Important Information

The value of investments and the income from them can go down as well as up, so you may not get back what you invest. This information does not constitute investment advice and should not be used as the basis for any investment decision nor should it be treated as a recommendation for any investment or action. You should regularly review your investment objectives and choices and if you are unsure whether an investment is suitable for you, you should contact an authorised financial adviser.