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The August Bank of England interest rate rise was a shot across the bow – a reminder that ultra-low rates are not the norm. While the move is unlikely to be the start of a huge or rapid rise in the cost of borrowing, it should prompt us to give thought to our financial resilience to income shock.
Could your clients cope with a reduction in income due to job loss or reduced hours, ill health, disability or caring responsibilities? We can take the opportunity to check their ability to stay on top of their money, commitments and liabilities if things became more expensive. In addition, we need to factor in the increased cost of having an illness or disability. Research from Scope and Macmillan inform us that disability, and conditions such as cancer, are likely to result in increased living costs, compounding the impact of that income shock.
Four factors may shape how well families weather absence due to illness in the future:
The Building Resilient Households Group are seeking to improve households’ financial resilience to income shocks, see their manifesto for change – The future of financial provision for those too ill to work.
Let’s keep on talking to clients about their financial resilience and ensure they are prepared for the unexpected.