Six Ways To Become Financially Resilient

The past few years have not been easy for most people. We are still recovering from the impact of COVID-19, and the financial system has taken a nosedive. How financially resilient are you in the wake of all the economic uncertainties going on in our world today? Financial resilience refers to your ability to withstand and recover from temporary hardships and disruptions that affect your income, investments, and/or assets. In other words, financial resilience is how readily you can surmount unforeseen situations that affect your finances. Resilience requires a holistic and proactive approach to sustainable financial independence. This piece looks at six simple strategies for building financial resilience.  

Create Financial Goals

Setting financial goals keeps you in check. What do you need to feel financially secure? Perhaps you’d like to pay off your car loan, build an emergency fund, or save money for retirement. Keeping an eye on the future will help you stay prepared for what comes next.

Financial goals can be short-term, midterm, or long-term depending on your objectives. You need to consider your medium-term demands such as bulk purchases, rent/mortgage, and utilities as you plan towards long-term goals like retirement. Leverage your savings, insurance, and investments to be fully resourced for any eventuality and review your plans periodically to suit your exigencies. Without financial goals, you might find yourself in a vicious cycle of debt, which leaves you feeling overwhelmed and vulnerable.

Live within your means

Create a budget and stick to it. Learn to live comfortably within your means, reduce financial stress, and save for old age security. Cut back on your spending because excessive spending depletes your funds, thus reducing your resilience. To minimize spending, do not consume more than you can afford and examine your weekly and monthly expenditure to determine your essential needs. 

Build an Emergency Fund of at least three month’s expenses

An emergency fund is a sum of money set aside over a period to serve as a cover for financial surprises. Unanticipated events such as job losses, medical emergencies, unexpected house repairs, and vehicle breakdowns can be frustrating and costly. Having an emergency fund will help reduce financial stress and protect you from financial vulnerability.

Pay Off Your Debt

Paying off your debt should be an ongoing process backed by a solid strategy. The key strategy to paying off your debt is accruing more wealth. How will you make extra money? Find an extra source of income, cut down on your expenses, reduce utility costs, and adjust your lifestyle to help you accumulate the needed resources to significantly reduce your reliance on debt.

Improve your financial literacy skills

Most people fail in life because they lack the knowledge to excel in key areas. Financial literacy is a must for everyone who yearns for financial stability. Attend seminars, read books, and listen to audios and other resources on savings, investments, stocks, and interest rates and spend time with people who can influence your journey to financial independence.

Think about retirement and plan for it.

You can live a very comfortable life after the traditional retirement age. You can plan towards that stage of your life such that you have enough income to cover your expenses without relying on family and friends. The first step is to make a firm decision about your financial plans and be committed to it.  When it comes to retirement planning, savings are insufficient. Invest in a retirement plan that gives you the peace of mind to live longer. Decide to sign up for a personal pension scheme today and enjoy the benefits of compound interest.

In conclusion, achieving financial resilience is possible when you deliberately plan for it. Don’t leave it to chance, a good financial strategy safeguards you against the shocks of life.Remember that financial security management never stops – consistency is the name of the game. To build financial resilience, you need to focus on building sustainable habits such as creating a financial plan, controlling spending, building an emergency account, and understanding financial literacy.