How you can build a financial safety net

TRICIA PHILLIPS SUGGESTS SOME SIMPLE STEPS TO HELP YOU SAVE MORE EACH MONTH

Your Money

SEVEN in 10 adults don’t believe they earn enough to be able to save – and that’s not surprising when you consider the challenge of making ends meet during the cost-of-living crisis.

But added to this is a lack of basic financial education, leaving many unable to manage their finances well.

Saving money is crucial, whether you’re putting cash aside for a particular purchase or building a rainy-day fund.

But research from the Money and Pensions Service shows that one in four UK adults has less than £100 set aside in savings, leaving them vulnerable to unexpected bills – and the rising cost of living.

Of those who are managing to save, almost two-thirds believe they don’t have enough to last three months without having to turn to expensive borrowing. On top of this, the average credit card balance in the UK is £1,500.

Though credit cards are useful for building your credit rating, if you’re struggling to make the minimum payments, putting aside funds for a rainy day is even more challenging.

Dealing with debt and not having an emergency cash buffer puts your future financial freedom at risk. In fact, half of all mental health issues are related to finances or being in debt.

EMERGENCIES

Without a safety net, unexpected expenses can lead to financial stress and instability. It impacts our ability to cope with emergencies, save for our future and achieve financial freedom.

We’ve teamed up with best-selling personal finance author Rob Gardner to get some tips on how to try to build up that important financial safety net.