13 Steps to Increase Your Financial Resilience
13 Steps to Increase Your Financial Resilience
By Rich Beattie Published February 17 2023
Are you ready for financial turbulence? Many people are not, even though ups and downs are certain to happen. Before the pandemic, for example, about one-third of American families weren’t financially prepared for the disruption of even a mid-sized financial shock. Preparation against the unknown is an essential part of developing so-called financial resilience—the ability to withstand a job loss, an economic downturn or anything that impacts your income or savings. Being financially resilient doesn’t mean having a lot of money. It’s about being smart and proactive with the money you have, so you can feel more confident that your finances are ready today for whatever happens tomorrow.
1 Crunch the Numbers
Start by tracking how much money is coming in—and exactly where it’s going out. Budgeting doesn’t have to be complicated; you can use apps or even just a notepad. But opening this key window into your finances is the first step away from living paycheck to paycheck and toward financial resiliency.
2 Snip Your Spending
Sure, spending depletes your savings, which decreases your resilience. But it becomes a problem when you regularly spend more than you can afford. The good news: You can most likely find expenses to cut. Comb through your payments, both monthly and day to day: What aren’t you using? What can you do without? Every little bit helps.
3 Build Your Emergency Fund
With your baseline established and optimized, it’s time to assess how much you can afford to save for emergencies. You’re planning for the future, so even if you’re only setting aside a little each month, the amount will grow with interest when you use a high yield savings account, CD or money market account.
4 Play the Long Game
Keeping the future in mind will help you stay prepared for what comes next. Look at what you need for medium-term needs, like big purchases, and begin to save for retirement. That may seem a long way off, but starting now will make you that much more resilient down the line.
5 Always Keep Learning
Having a steady income can help you stay resilient in your spending and saving. Lots of factors can disrupt employment, of course, but having transferable, marketable skills will make it easier to find work if you lose your job. Figure out what knowledge you need to reach the next level at your current job or pivot into a new career, then start making it happen.
6 Network, Network, Network