In life, nothing is certain. You can have a high-paying job only to lose it in an instant. You can be as healthy a horse only to fall terminally ill the next day. It is easy to think your savings can help you get by for at least six months only to accumulate debt shortly after. If you don’t build your financial resiliency, then you will really have a hard time preparing for a financial setback.
Your financial resiliency is your ability to survive and bounce back after experiencing a major financial difficulty. Note that a financial setback can do more than ruin your finances. It can also cause you unnecessary stress, harm your health, and even ruin your relationships. If you don’t start early in building your financial resilience, then you are only putting your financial health at greater risk.
In building financial resilience, it is important that you arm yourself with the right ammo. By educating yourself on the things you can and shouldn’t do, you can better prepare yourself, take charge of the things you can control, and even prevent a major financial trauma. The following are just a few examples of the things you would need to steer clear from so you can establish financial resilience.
Evading Financial Literacy
One of the biggest financial mistakes you can make is to stop educating yourself financially. You may have an idea of how to grow your savings, minimize debt, and do your taxes. But leveraging financial literacy can better prepare yourself in case of future financial troubles.
If you are a breadwinner of the family and something happens to you, your family’s financial health can suffer. It becomes an even bigger problem if you suddenly pass away. Educate yourself financially and you can make better decisions that can affect you and your family’s future. You will learn that aside from growing your savings and your investments, you also need the right insurance to better protect your family.
In case of a family member’s wrongful death, you can get a hold of your preferred wrongful death lawyer to file a claim. If any member gets sick, you won’t have to worry too much knowing you already insured every member. You can inspire your family to be financially responsible and prevent, if not avoid, a financial setback from ruining their own finances.
Relying on a Single Income Source
One reason why the rich and successful get to keep their status is due to their multiple streams of income. You will learn that they have at least three sources of income. This is not just because they can afford multiple investments and can easily build a business if they want. It is because they know that the best ways to grow one’s wealth are by spreading their risks and having more than a single income.
If you only have one source of income, then you will find it hard to maintain your financial health if you lose that single income source. You don’t have a back up to support your finances and can no longer afford the things you need and want. It is like going back to square one.
To become financially resilient is to have many income sources. They can be in the form of a side hustle, a remote job, or a business aside from your nine to five job. Once you managed to increase your income sources, avoid increasing your cost of living. You may be able to afford it, but living within your means and saving and investing what you get from your side hustle can help you improve your finances.
Choosing to Be Reactive Rather Than Proactive
There are many reasons why experts often tell us to be proactive instead of reactive. If you only wait for things to happen and react when an issue arises, you can end up making a bad decision and make the situation even worse. But if you choose to be proactive, you will work hard to eliminate the problem before it even affects you.
Reactive people often panic and would act too soon while under stress. This makes them susceptible to making the wrong decisions. If you are a proactive person, you will already think of future financial issues and focus on the things you can control so you can avoid your finances from being ruined.
Being proactive allows you to think ahead and better prepare for future hassles. This means buying the right insurance so you can have something to rely on in case you get sick or disabled. It can mean making early revisions of your budget and reducing your spending once needed. It is all about exploring even the unconventional solutions to solve your issues before they get worse.
Everyone can benefit from building financial resiliency. You can have better peace of mind knowing you have the ability to recover in case you run into future financial trauma. Knowing you can live comfortably and face the future with fewer worries can help you enjoy a better and more fulfilling life.