Financial resilience - a journey, not destination

No matter what your circumstances, it takes planning and making informed decisions to build up financial resilience. Our lives change continually, and financial resilience will mean different things depending on what stage of life you’re at: whether you’re a homeowner, have kids or are planning for retirement. It also depends on whether you have savings and your accessibility to these.

Financial resilience usually comes from planning ahead for any potential bumps in the road. What we’re all going through today highlights why this is so important.

The current crisis we face with Covid-19 means that many people are facing a change in circumstances – whether that’s through illness, unemployment, reduced hours or family members who are currently unable to contribute financially. But for those with accessible savings, the future probably looks a little less bleak.

The perfect time to save?

It’s the beginning of the new tax year, the time when your annual ISA allowance is reset. This means you can save up to £20,000 between now and 5th April 2021 tax-free into a range of ISAs including investment (stocks & shares), cash and lifetime ISAs. Many of us have been finding we have more time to organise things around the home during this period of ‘lockdown’, so why not your finances as well?

While non-essential shops and facilities are closed, holidays are cancelled and many of us stay at home, those who are still working or furloughed may find that they’re able to save regularly during this time. No matter how long the period of lockdown, it’s possible that social guarding safeguards in some for or another will continue to limit the way we’re used to being able to spend for the foreseeable future – with good reason of course.

While we have the time, it makes sense to start making the most of tax-free savings so that when we’re able to start spending normally again, we have a little tucked away for the longer term.

How do I get my finances in order so they’re looking better for the longer term?

Quick wins

You’ll probably have budgeted monthly outgoings that aren’t being used at the moment due to Covid-19 and the current restrictions we face. Things like train season tickets, gym memberships, cinema cards, restaurant discount cards, TV packages that include sports channels. Have a quick check on these things and see if you can freeze membership or if the provider is offering any kind of compensation. Your bank balance will thank you for it in the long run, and if possible, you could try to put the money you save into an ISA. Find out more about Cushon’s range of ISAs.

With many of us spending the majority of our time at home due to the current situation, it’s the perfect opportunity to go through wardrobes, cupboards, lofts and other nooks and crannies and pull out all those things you don’t use or need anymore. Because other people might be interested in buying them. Now that most non-essential shops are closed, shopping online has an even more important role to play.

Online sellers like eBay are still open for business and drop off points for sellers to send goods are still open (this is the correct information at the time of writing), as long as social distancing guidelines are adhered to when visiting any of these sites.

Don’t forget also that charities will be struggling, so instead of throwing items away, consider whether they would be worth saving and donating to a good cause later. Give the home schooling a rest and get the kids involved! You could incentivise them by setting up a Junior ISA and saving any money made from the selling of unwanted items into it. Not only are you decluttering for a more peaceful home, you’re also saving for your children’s future! Find out more about the Junior ISA.

It’s so important to keep saving regularly. No one could’ve predicted the Covid-19 pandemic and no one can yet say exactly what impact this will have on jobs and businesses in the long run. If you’ve been saving regularly, you at least have some reassurance that there is money there to fall back on in case the unexpected happens. When it comes to investing, saving regularly is also important. It’s tempting to ‘run with the herd’ in extreme market conditions, but investing is for the longer term and saving regularly into investments can help negotiate the ups and down for the longer term.

If you have a lump sum to invest and unsure about when to invest, why not ‘drip feed it’ into your ISA over a number of months? If you invest a little bit (or a lot if you have it!) each month, you’ll be averaging out the price of your investments, which could mean avoiding buying all your shares at the highest price in one go and potentially benefitting from gaining more shares at a lower price. This is known as pound cost averaging.

For more information on saving and investing, please visit our website.