What does financial vulnerability mean to you?

William Adams, Specialist Financial Adviser from Wesleyan Financial Services, discusses misconceptions surrounding financial vulnerability and highlights the importance of building financial resilience for teachers and senior education leaders.

Financial vulnerability essentially refers to the degree in which a person is capable of being injured financially when an adverse event occurs – these such events may be difficult to divulge and share with others. For some, the very term ‘vulnerable’ is problematic in itself, as many of us have preconceptions regarding what vulnerability looks like.

In spite of this, most of us throughout our lives will invariably face challenges along the way. There may well be events that increase our risk of financial vulnerability – teachers and senior leaders in education are no exception.

The Financial Conduct Authority identified four key drivers of financial vulnerability – these included:

• Life events

Bereavement, relationship breakdown, job loss.

• Health

Poor health or illnesses which impact our ability to carry out everyday tasks.

• Resilience

Difficulty withstanding emotional or financial shocks.

• Capability

Low knowledge of financial matters and or low confidence in money management/poor literacy and numeracy skills.

Each of these drivers encapsulates a broad spectrum of potential situations or states which could potentially put people at risk of financial vulnerability. This illustrates the complexity of this area and highlights that all people are potentially at risk of becoming vulnerable.

Building financial resilience is the longer-term approach to managing your money and can help people to recover more quickly from stressful financial situations.

At any time, unexpected life events can suddenly change our circumstances. Having a solid financial plan in place and setting financial goals for your future are good steps towards improving financial resilience. This helps not only to reinforce optimism but to ensure that during difficult times, financial stress does not become an additional burden, as worrying about money can massively impact mental health and wellbeing.

Another useful measure towards building financial resilience is to improve your own financial literacy, this can help you to feel more generally confident and better informed.

How can specialist support help you?

A Specialist Financial Adviser can help you to build financial resilience and discuss other useful options and measures, such as creating an emergency fund, protecting your income and exploring potential investment options to make your money work harder for you.

Having the right protection in place can play a large part towards financial resilience. A good starting point here is to sit down with an adviser and gain a thorough understanding of your current workplace benefits, such as sick pay and your death in service. It is important to consider these, along with any other provisions you may already have, and work out how long these would last if your income were to suddenly cease.

Once this has been established, your adviser can explore the options available to protect your income – helping to put you in an informed position.

A good adviser is there to educate and empower you to take control of your finances and your financial future and to help you navigate challenging times. It is a relationship built on trust, without judgement.

During a review, your adviser will understand your circumstances, define your goals. After assessing your individual situation as a whole, they will put you in an informed position regarding your options, looking at ways to improve your financial resilience and make your income and capital work harder for you.

If you would like support or guidance on understanding your financial position, speak to a Specialist Financial Adviser at Wesleyan Financial Services for a financial review. Charges may apply. You will not be charged until you have agreed the services you require and the associated costs.

Bear in mind that the value of investments can go down as well as up and you may get back less than you invest.