5 steps to Building Financial Resilience

If there’s one thing we’ve all learnt from the last few years, it’s that life can surprise us. Sometimes it’s a good surprise, like a new baby or a pay rise. Sometimes it’s more of a nasty shock: redundancy, sickness, a relationship breakdown.

What do all these things have in common? They can all impact your income and/or your outgoings in one way or another. Financial resilience simply means getting your finances into the best possible shape for whatever life might throw at you next.

Step 1: Give your finances a check-up

This is especially important if you’re the type to bury your head in the sand when the bills start piling up. But most people can benefit from getting an updated idea of where their money is going.

If you have any loans and credit cards, what are the balances on each of them? Do you have a few quid in a savings account you’d forgotten about? Are all of your Direct Debits paying for things you still need or want?

Dig out your statements or log on to your online banking and spend an hour or two working out how much money you have and where it all is.

Step 2: Make a budget

Creating a budget will help you understand what you’ve got coming in each month and where it goes. It will help you identify where you could make savings and to calculate your disposable income, or ‘magic number’. This is the amount of money you have left over each week or month when you’ve paid for your bills and essentials.

Whether you’re struggling to cover your bills each month, or just want to save a little extra cash, building a strong budget and following it can benefit everyone, no matter your situation. Check out this guide to creating a budget.

Step 3: Get help if you need it

If…

• your budget shows you that you’ve got more money going out than coming in
• worrying about money is keeping up awake at night
• the balance on your debts isn’t coming down

then it’s possible that you need some help.

If you don’t have enough income coming in, is there any government support you could apply for? Millions of people are missing out on the benefits they could be entitled to - don’t be one of them. Visit the turn2us website to find out what help is available.

Step 4: Plan for the future

If you can afford to put some money away, having a savings cushion could help you bounce back from life’s little surprises. Making your budget should have given you an idea of the bare minimum you need to live on each month. 

Have a look around for a current account or an instant access savings account with a competitive rate of interest. You can find more information about how to save on the Money Advice Service website.

Check if you’re eligible for Help To Save. If you’re on a low income and you get certain benefits, under this scheme the government will give you 50p free for every pound you save – visit gov.uk to find out more.

Step 5: Work on your credit score

Check your history with the credit reference agencies (they may all hold slightly different information, so be sure to check all three):

• Equifax via Clearscore
• Experian
• TransUnion via Credit Karma

and then follow these steps on how to build your credit history.

Congratulations! You should now be further along on your journey to more financial resilience and wellbeing. But like any journey, there could be setbacks along the way. The most important thing is to keep going in the right direction - and ask for help if you need it.