We all have plans, but financial wellness means being as prepared as possible for the unexpected. From your boiler breaking down to a job loss, or the death a loved one.
Whether you are facing a temporary or permanent financial loss, it helps to have some emergency savings and protection in place. The good thing is there are small steps you can take today to help you feel more protected against things we might not be able to control.
We asked how far in advance people plan for their financial needs and found that 64%* only plan for a year or less. But planning ahead can be a good way to financially prepare for the future.
Having a rainy-day fund for unexpected money shocks, like an unexpected event or bill, is a great foundation to safeguard yourself, your lifestyle, and your family.
You can start by aiming to save around one month’s income, but it's ideal to have at least three to six month's income saved. It’s a good idea to build this up over time, and make sure it’s kept in a separate bank account.
Insurance may protect you, your loved ones and your belongings from the cost of something going wrong.
If something unexpected does happen – such as a burglary, a car accident or an illness – it means you won’t have to bear the full financial cost on your own.
You may be familiar with insurance for your home or car, but there will come a time when you need to protect things even more important – your life and income. Insurance for these things means that you and your family are taken care of if the worst should happen.
Life assurance |
Critical illness cover |
Income protection |
|---|---|---|
| Life cover pays an amount to your family or dependents if you die within the term of the policy. It’s helpful to think about what you want the money to cover when you set the amount – for example, to clear a mortgage or debts, pay funeral costs, or money to support family living costs. | This can be bought as a separate policy or alongside life assurance. It pays a set amount if you are diagnosed with one in a list of serious medical conditions, such as cancer, even if you recover. You should consider the key expenses or bills you might want it to cover. Don’t forget to think about the costs for things like help with your recovery or adaptions to your home should you be less mobile. | Income protection covers your wages or salary should you become unemployed due to an accident or sickness. It pays out for a fixed period, or until you start working again, retire, or die. You can set the policy to pay a replacement income, or just to help cover essential bills. |
It’s really important to think about what you can do to protect the savings that you’re working hard to build up. This includes anything you have that you might want to pass on to your loved ones when the time comes, as well as your retirement savings.
People often forget that a will is a form of protection for your loved ones.
If you die without one, you’ll have no say over what happens to your money and assets. A court will decide how they are distributed, and only married or civil partners and some other close relatives can inherit. It could also make the process more stressful, longer, and more costly for your loved ones.
So sadly, if you fail to leave instructions, in some cases, relations by marriage, close friends and even unmarried partners could be left with nothing.
You can access low-cost will-writing services if your affairs are straightforward. For example, you can get a low cost will template or pack from stationery shops and there are also online services. More complex situations might be better handled by a solicitor, where charges will apply.
Your workplace pension is a valuable investment and there are ways you can protect it. After all, they are your hard-earned savings.
Nominate your beneficiary
Do you know how much income you’ll need to support the lifestyle you want in retirement? Use our retirement calculator to find out if you’re on track to meet your retirement goals.
A quick summary on protection
*The Fidelity Global Sentiment Survey, 2023. The data collection, research and analysis was completed in partnership with Opinium, a strategic insight agency. Data collection took place between 3rd July and 18th July 2023 and includes a sample of 1000 UK adults. Our research found that 64%* of people define ‘financially well’ as having money set aside for an emergency and 48% say this is the most important aspect of financial wellness they want to address.
