Times you risk getting into debt
Common life events could leave even the most prudent of us vulnerable to debt.
As a nation, many of us are feeling overwhelmed by our financial problems. Debt-related enquiries to the Citizens Advice Bureau (CAB) increased by 23 per cent over the past year.
For those lucky few who have never been in debt it must be tempting to judge others for their financial mismanagement. Perhaps you assume the rest of us are constantly pounding the plastic or jetting off on city breaks we can ill afford.
This may not necessarily be the case. However clean our credit history, there are times we are all especially vulnerable to getting into debt.
Walking down the aisle
The typical UK wedding now costs around £20,000 – almost as much as the average salary. Unless you have ultra wealthy parents who are willing to foot the bill, your dream wedding could easily get you into debt.
To avoid starting your married life in hock, you could start putting as much as you can into a savings account as soon as you become engaged.
Starting a family
Whether you’re overjoyed or terrified by the prospect of your impending new addition, a baby brings a lot of expense.
Even if the pregnancy is planned, there will probably be expenses you haven’t budgeted for. As well as clothes for the baby, the mother-to-be may need a new wardrobe to accommodate her bump. Once he or she arrives, there are baby monitors and car seats to pay for.
To learn more, see ‘Eight money-saving tips for parents’.
Splitting up
Ending a relationship can also make you vulnerable to debt if you happen to be female. According to research men (and especially fathers) become around one third richer after a divorce. However, a woman’s income will normally fall by more than a fifth.
To learn more about financial differences between men and women, check out ‘Who is financially more important?’
Becoming ill
If you are unable to work due to ill health, you may have trouble covering your mortgage or keeping up with repayments on credit cards and loans.
If you are employed at the time of your illness, see if you can claim sick pay from your employer. Otherwise you may be entitled to Statutory Sick Pay from the government – £79.15 per week for up to 28 weeks.
Those who are unable to return to work could be able to claim other state benefits such as Income Support or Disability Living Allowance. For advice on state benefits, it might be worth speaking to a hospital or community social worker or the CAB.
Being widowed
If your partner dies without having taken adequate financial precautions, you could be left vulnerable to debt.
UK funeral directors now put the average cost of a funeral at £1515. If your partner’s death is unexpected, your family may not have enough savings to cover this cost.
A payment from your partner’s life insurance policy may help cover funeral expenses as well as providing a regular income.
**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**
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