The Association of British Insurers (ABI) has released a study that suggests that almost a quarter of people in the UK will become unemployed at some point during their working life, if only for a short time. But the findings indicate there are some Brits who will be out of work for 12 months or more and the ABI is warning that families could be in real trouble if they do not sort out their finances as soon as possible. The prospect of being jobless and the likelihood of an economic downturn this year should prompt people to address their money situation and this may involve taking out a debt consolidation loan to cover numerous outstanding bills.

However, unemployment is not the only problem facing householders. Recovering from an accident or illness can also put a breadwinner out of action for some time and this may be another reason why people need to think ahead and consolidate their finances now, the ABI said. Nick Starling, the ABI's director of general insurance and health, said: "It is important when people are taking out a loan or a mortgage that they think about how they would meet repayments should they fall ill or become unemployed."

Cheshire Building Society has also urged Brits to sort out their personal finances, especially after Christmas left many people with less money than they are used to. Keeping a diary of expenditure helps people to see where their money is going and where it is being wasted, according to the building society, which said that by recording outgoings people may find they end up spending less, thereby freeing up funds to pay off credit card bills or existing loans.

Cancelling unnecessary subscriptions and direct debits, which may be a drain on an individual's bank account, is also recommended. Cheshire Building Society's advice is echoed by the Co-operative Insurance Society, which recently said that life-changing events like getting married, buying a house or having a baby can have a major impact on somebody's finances. But it said there is evidence to show that many people do not have the "right provision in place" to cater for their financial needs - and this may involve taking out a debt consolidation loan.

Charles McKeown, CIS insurance sales director, said that people are often "ill equipped" to cope financially when changes in their life occur. "By then it is often too late to put the necessary provision in place," he stated, before adding that while financial planning may be a daunting prospect, it is nonetheless essential.

Meanwhile, it is not only the risk of illness or unemployment that might prompt homeowners to get their financial affairs in order. Recent commentary on the state of household finances by SimplySwitch suggested that the cost of living was set to rise over the coming year, with the likes of fuel costs expected to increase as monetary conditions remain tight. Those worried about their current outgoings could consider debt consolidation loans as a means of addressing budgetary constraints.