Tips on How To Build Financial Resilience
Building financial resilience has never been more critical, especially in today’s volatile economic landscape. From the ongoing effects of inflation and rising interest rates to global supply chain disruptions and concerns about a potential recession, many individuals are grappling with financial uncertainty. The tech sector’s layoffs and shifts in energy prices have added further challenges, impacting jobs and household budgets.
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. 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:
1) Expand 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.
2) Maximise Value from Expenses
Do you have a budget that separates the must-haves from the good-to-haves?
Undoubtedly, we spend when we go out. And this is a good thing – supporting the economy and helping businesses stay afloat while enjoying the experiences our expenditure enables. This may also be 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.
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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.
3) Build 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. Here are some reframes we can use to build that mental grit. In holding that hope, that gives us energy to live life through all the turbulence and uncertainty for the road ahead!
