What is Financial Resilience?
What is Financial Resilience?
We can’t control everything that happens in our lives, but we can prepare ourselves for future setbacks. It’s not about being negative; it’s reinforcing optimism for tomorrow with a solid financial plan.
At Hansford Bell, we’re committed to your future. Whether you’re looking for bespoke wealth management, retirement planning advice, or help choosing insurance products, we’re here to put the life back into financial planning.
In this blog, we explain everything you need to know about financial resilience and how to build it up.
What is Financial Resilience?
We all experience unforeseen setbacks from time to time, and many have the potential to take a toll on our finances. From ill health to divorce to unemployment, these events can be difficult financial shocks to withstand without a plan in place. Financial resilience describes your ability to weather the unexpected storms life can throw at us, and recover more quickly from financially stressful situations.
Why is Financial Resilience Important?
Financial resilience enables you to deal with any unexpected costs without them disrupting your current or future plans, or making your household vulnerable. More than that, knowing that you have robust finances will give you a sense of security and peace of mind, allowing you to go about your life with confidence, without worrying about the future. It also means you don’t have to stress about money during an already difficult time. If you become ill, suffer an injury, go through a divorce, or are made redundant, the last thing you need is money worries to make the situation feel even worse. And, above all, preparing for tomorrow means being able to make the most of your today.
How to Build Financial Resilience.
Financial resilience can’t be achieved overnight, but it can be developed in time with the right plan. Below, our specialist financial life planners outline some steps you could take. Looking for more bespoke advice? Feel free to give us a call.
Create Emergency Fund
It’s a good idea to amass a stash of savings in case of emergencies to help you recover more quickly from difficult periods without becoming vulnerable. Most experts recommend this amounts to at least 3-6 months of living expenses. These savings should be in a liquid state so that they can be accessed quickly and easily.
Own Assets Outright
People who own their assets outright have more financial flexibility and security. Eliminating any debt is therefore highly advisable, or at least reducing the amount you have. Ideally, no more than 15% of your income should be consumed by debt.
Protect Your Income
Taking out an insurance policy is a great way to quickly bolster your financial resilience. There are a range of options available. Health insurance can help support you and replace lost income if you develop an unexpected illness and are unable to work. Another product on the market is life insurance which pays out in the event of your death, providing your dependants with vital financial support at an incredibly difficult time.
Develop Financial Literacy
The world of finance can feel confusing and jargon-heavy, but improving your financial literacy will make you feel more confident and informed when making important decisions. And, with a solid base of financial knowledge, you’ll be better able to anticipate and navigate any tricky territory.
Set Goals
Setting goals can help you take a more active approach to your money, where financial products become tools for engineering the life you want. Not only will this help you live the lifestyle you truly desire, but having a clear plan is a good way to develop your financial resilience.
Make Money Work Harder
Once you have some essential safety measures in place like an emergency fund and insurance, you could try to grow your wealth even further. By investing, your money has the potential to increase in value – particularly if you do so over a long period of time and the original amount compounds.
Plan For the Future
It’s never too early to start planning for your retirement, and doing so is critical for achieving long term resilience. Whatever a fulfilling retirement means for you, put the financial architecture in place to realise it today. That way, your hopes and dreams for later life will be resilient too, and more likely to come to fruition.
Financial Life Planning & Financial Resilience.
Financial life planning is about your life, not just your finances. At heart, it’s an approach to financial planning that focuses on delivering tangible benefits like clarity, choice, peace of mind – and financial resilience.
Plotting a course for your money with a specific end goal means engineering a better life, not just amassing capital. It’s making financial decisions with an overarching plan in mind, and always looking ahead for the unforeseen.
What is the Difference Between Financial Planning & Financial Advice? >
Achieve Financial Resilience with Devon Financial Life Planners.
Hansford Bell is a team of chartered financial life planners based in Tavistock. We specialise in showing people what’s possible, and crafting robust financial plans built to weather any storms.
Looking to build up your financial resilience? Let’s have a chat today.
Note: This blog is for general information only and does not constitute advice. When investing, your money is at risk, and you may not get back the original amount invested.
Read next: How Do You Know When It’s Time to Retire?
