Even though decorations have been up around Morecambe and Lancaster since late October, now is about the time of year when the rest of us will be looking forward to Christmas. Like most people I do enjoy the atmosphere around Christmas; putting up the tree, buying everybody gifts and going on festive nights out, but it always leaves a big hole in my wallet. This year, on average we are expected to spend around an extra £400 each on presents and food than we would in other months, which seems a lot just for one day. Maybe we should all look at how to use our money more wisely and spend it on something that will benefit us all year round.
Lots of us spend more on Christmas than we do on protecting our family finances should our income stop due to accident, sickness or death. Taking out income protection or life cover can sometimes feel like a bit of a depressing task, because we don’t want to think about bad things happening, but how would we feel if the worst happened and we discovered we weren’t properly covered? Money is the last thing that I would want to be worrying if I wasn’t able to work because I was sick.
We usually find the money to buy everyone presents for Christmas Day, yet don’t always feel we can find the money to ensure our income is fully protected for the whole year, at what could be a similar cost. I’m hardly about to go and spend the money I have for my girlfriend’s Christmas presents on buying myself life cover and income protection policies. I don’t think a few policy documents under our tree would look very festive, nor do I think that saying ‘Santa Clause must be feeling the effects of the credit crunch too’ will pass as a valid excuse. I do however believe that we should prioritise when budgeting and make sure that we can earmark some of our money to give ourselves and our family what they really need instead of what they want. We buy people presents to make them happy, but surely the best present you can give to someone is security should we not be able to provide for them anymore.
A couple of years ago we may have thought that we had a good safety net should we be off work sick or die, having gained equity in our homes during the boom days of property prices. Now that property prices have fallen, that safety net has been taken away from us. Even when we did feel safe, I don’t think many people would have been very happy at the prospect of downsizing because they were unable to keep up with mortgage repayments. We don’t know if, or when something bad might happen and how we will be able to cope financially with the change in income. It’s a big gamble that we’re taking if we decide that we’d prefer to spend excessively on material things, rather than making sure that our finances will be ok should we not be able to work.
Taking out long term protection is very important. Although we may have a false sense of security, not many of us are ever well off enough to take the risk. If you would like to review your protection needs you should consult an Independent Financial Adviser (IFA). Kieron Bassett Financial Services are an Independent Financial Advisers and we are open six days a week. Contact the office on (01524) 832057 or via e-mail info@kieronbassett.com to arrange an appointment.
Jason Hinde CertPFS
23rd November 2009
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