Are you as financially secure as you think?

Financial security is something we all dream of and may even feel is a distant prospect.

So it’s worrying that many people feel they’re in a good place when the reality is quite different.

According to fintech firm Iress, almost half of Brits (46%) feel they’re financially secure.

But just one in ten (11%) actually meet the criteria for actual financial security.

What does financial security really mean?

For many, financial security will mean being in a position to cover your regular expenses, like energy bills and rent.

But it’s also about being able to future-proof your finances, so you’re prepared for whatever life throws at you.

That could be anything from rising living costs to unexpected expenses like replacing a broken appliance or an emergency trip to the dentist.

It also means being able to cope with a job loss or reduced income without finding yourself at a financial cliff edge straight away.

And of course, future-proofing your finances means planning for later life by putting money into savings and a pension.

Many people don't have a safety net

In the Iress research, just 19% of people said they were fully prepared to meet their financial needs now and in the future.

Meanwhile, 17% said they weren’t prepared at all.

So that means a huge number of households don’t have any financial safety net in place in case they’re hit with unwelcome surprises.

“The worrying issue is that people think they are more financially secure than they actually are,” said Alistair Morgan, UK chief executive of Iress.

This, he stated, means they’re “underprepared and underprovided for when they hit a financial crunch point”.

Why you need a rainy-day fund

Unexpected expenses are usually expensive.

So if you’re on a tight budget, even small financial shocks can have a big impact.

That’s why it’s so important to have a rainy-day fund, so you can cover these costs without having to borrow money or dip into savings.

A good goal is to have enough saved to cover around three months of your living costs - things like rent, bills, food and transport. 

We’ve put together some tips on how to build up a rainy-day fund to help you get started.

Even putting away a small amount regularly could make a big difference if or when you ever need it.

What if I can’t afford to put money aside?

If you’re already feeling stretched to the limit, then putting money into savings might not feel like an option. 
 
But help is out there. 
 
We’re here to listen to you without judgement, understand you and improve your financial wellbeing, whether that’s through:

• helping you budget
• letting you know what benefits you’re entitled to
• recommending debt solutions