Building financial resilience is becoming increasingly important. 2020 is turning out to be a year that none of us had expected. There is a lot of uncertainty around when all these will end and go back to ‘normal’. It has also been challenging for individuals to figure out a new way of living. Studies have shown how COVID-19 has impacted our finances.
As spending patterns change, this has a huge impact on the economy. This affects businesses and the people they employ. This becomes a cycle as employment then impact spending. Right now, undoubtedly every country’s economy is negatively affected. A lot of governments are currently helping to support their people with grants and payouts. However, what happens though when that stops?
We can’t control what comes at us. Yet, we can prepare ahead of the curve to improve our chances of having a life that we want. Being financially resilient is to be able to weather the storms that come at us. Here are 3 quick tips:
Expanding Income streams
Most of us rely on employment in 1 job for a salary to pay for all our financial needs. With the ambiguity around job markets, it’s time to look at how you can increase your active income stream beyond that 1 job. Have you considered perhaps taking on some freelance work or another part-time job?
Since most of us work 8-10 hours daily in our full-time job, this limits the extra hours we can work. My parents took on 3 jobs each, sleeping around 4 hours a day and relying on weekends to rest. That’s a little extreme but having a couple of jobs meant that if they lost 1, they still could rely on the other 2 jobs for money to cope with life.
On that note, don’t just focus on selling your time for money. Start building passive sources of income with the money or ‘assets’ you already have. Have a creative eye? Sell your designs online. With the economic instability, this is also a good time to look at the financial markets and get started on your investment portfolio. By building more income streams, you have more multiple ‘taps’ to draw from. In the event that one stops flowing, you will not become dry.
For a quick summary of how to earn money, check out our article on that topic.
Maximising Value from Expenses
Post lock-down, do you find yourself spending more money than before now that you go out more often?
Undoubtedly, this is the best time to spend – supporting the economy and helping businesses stay afloat. It’s also a good time to review your expenses. Identify what are must-haves and what are items that you can easily do without. That way, at crunch time, you know how much buffer you have in your expenses.
Now is also the time to look at your spending habits. If you have been spending a lot on bubble tea, perhaps check out if that shop has a reward scheme. With the increased reliance on connectivity, is your existing data plan with your telco provider the most optimal one too?
Check your expenses to see where you have leeway to stretch and expand/contract when you need to! That way, you build your financial resilience by enhancing your ability to respond to the circumstances.
Financial Resilience by Building Mental Grit
Last but not least, financial resilience is not just about having the money to meet your needs. It is also about having the grit and mindset to push through difficult financial seasons.
Sometimes, logically we know we have enough money, but the mind plays tricks into catastrophising the worst-case scenario that can happen to us. That makes us stressed out and worried that we won’t be enough. It’s thus important to become more aware of the inner fears that we have. Spend time knowing when and how they appear in our thoughts. This way, we can intentionally address the fears and ground them in facts to avoid being paralysed into inaction.
Building mental resilience is to know the balance between what needs to change, and what can be changed and trusting that life can get better. In holding that hope, that gives us energy to live life through all the turbulence and uncertainty for the road ahead!