Financial Resiliency isn’t just about setting aside some money (though that is highly recommended), it’s a lifestyle, and depending on your individual situation may take years to realize true resiliency. After the start of the 2008 recession many individuals found themselves living close to the financial edge and have spent much of their time since working hard to recover.
Some were perhaps more fortunate and may have merely stumbled a bit or forgone raises for a time. Regardless the lessons of 2008 are clear: The good times don’t roll on forever, every so often our financial ground shakes and if we are living on the edge we may well fall over.
There are several aspects of financial preparedness to consider, but for simplicity sake we have isolated two main pillars that you should concentrate on when trying to establish your baseline financial preparedness.
Logistical Preparedness
One of the first and easiest things to do is to organize your financial information including assets, liabilities, insurance, deeds, legal and medical documents, passwords, personal documents, etc.
The organization of these items may seem like an odd priority, but in the case of a major emergency, like a natural disaster that requires you to abandon your home it is important that you have quick and easy access to these documents. In the end this can save you an amazing amount of head ache as you try to obtain medical assistance, filing insurance claims and just generally getting your life together. We also suggest keeping them in a water-proof bag.
Fore more information visit this link: FEMA
Emergency Savings
The other piece of financial preparedness is becoming financially resilient by buffering your lifestyle with a store of funds or resources so that you can better weather the unexpected, like unforeseen medical expenses or a car break down, up to supporting your family after a layoff to rebuilding your life after a major disaster.
Instead of putting a dollar amount to the recommendation of emergency funds most industry experts use the metric of “Months of Living Expenses”. The reason for this is that everyone’s lifestyle differs, and as such the amount of resources needed to maintain that lifestyle will differ from one person or family to the next.
All that being said the general rule of thumb for minimum finical resiliency is given as 3 months. However, most will recommend that you save 6 months, and some will even suggest up to a year. We highly recommend this Forbes article on the matter as it includes an overview of the need for a rainy-day fund and provides a calculator to give you an idea of how much you may need to save.
At a time where more than 70% of Americans live paycheck-to-paycheck saving up this amount of money may seem as if its impossible. However, for those dedicated to eking every penny out of their dollar there are some steps you can take to help you reach your financial reserve goal. Some basic steps you can take, in the broadest of terms are:
Live within your means
Spend less then you bring in. Regularly exceeding your income is a surefire way to get into serious debt. Once you’re in that hole it can be exceedingly difficult to climb your way out. So create a monthly budget and adhere to it!
Commit to becoming debt free
If you are heavily in debt more and more of your hard-earned income simply vanishes to interest payments. Even a small debt in a low interest account can soon turn into a monster if left alone for any length of time. Pay off your credit card every month!
Invest your money in something that provides a return on its value.
While Stocks, mutual funds, IRAs, and 401(k)s get all the attention when it comes to financial investment (and their use is highly recommended) there are other ways to invest your time and money. Some more physical alternatives could be a garden to grow those expensive fruits, vegetables and berries. Or perhaps purchase some tools for a hobby that you enjoy and could maybe make a bit of cash for doing on the side. Or probably most important: Investing in classes and materials to improve your knowledge and know-how.
Be willing to change your lifestyle to attain your goals
Many of us become complacent in our lifestyles and expectations. Do you really need that $5 coffee every morning? How about that $150/month smart phone bill? Do you eat out every week? What about that big vacation you take every year? When you start looking at your budget and lifestyle you can almost always find items that you can live without and removing them can make all the difference for financial resiliency.
Gold and Silver
Gold and silver have been seen as a form of currency for thousands of years and that has not changed. China and Russia have imported tons of gold and silver in recent years and we should all do the same. We cannot mass produce precious metals like we can fiat currency which gives it actual value. We recommend allocating at least ten percent of your investments into precious metals as a means of protection against volatile, ever changing markets.
Financial learning
For those interested in tightening their financial belt there are a number of great lists on small things you can do in your every day lives to reduce your expenses. A few of them can be found at:
There are also a number of classes and books that you can take to further expand your financial Savvy-ness. We have used the advice of Dave Ramsey and would recommend his services as well.
What if I can’t afford to become resilient?
We understand that even after you tighten your belt you may still find it hard to spend up to thousands of dollars on items you may not need to use for a few years. We don’t want money to hinder you from beginning. It is vital that you don’t procrastinate and start doing little bits as you can now, but we want our members to become resilient faster than that. So Resilient Living has found a solution by adding a product advocacy plan. If you are willing to help Resilient Living grow we can in turn help you get some, if not all, of your products and resiliency supplies paid for. Contact us to learn more.
RL Recommendation:
Read through this financial page again and then take a look at your budget. Set aside a monthly amount that you deem prudent for acquiring resiliency. Later when you journey through our shop consider starting a relationship with us so we can help you protect your family. This website is only a fraction of what we have to offer.