Financial resilience means you can manage unexpected expenses or those unforeseen tough times without being financially stretched or needing to borrow money. It acts like a financial buffer that protects and helps you remain in control of your finances, even when things do not go according to plan. Being financially resilient is like having a strong safety net no matter what life throws at you.
How do I know if I’m financially resilient or not?
Ask yourself two questions:
1. Do you have enough money set aside to cover an essential unexpected expense? Things like a washing machine breaking down or a car that suddenly needs repairing.
2. Do you have a plan in place to protect you and your family’s income, in case of illness, injury, loss of income, or premature death?
If the answer is no to either of these two questions, you need a plan.
Complete a financial health check
Taking a long, hard look at your finances might seem a bit overwhelming at first. But a financial health check will give you a realistic idea of what you can and can’t afford, right now.
It will also help you work out any changes you need to make to become financially resilient.
Financial Wellbeing Self-Assessment
Plan for the unexpected
Building a ‘rainy day’ fund separate from your day-to-day spending is vital. It means you’ll have savings to fall back on when you need to. How much should you save? It depends on your situation but saving three to six months’ worth of essential expenses is a good guide.
By essentials we mean things like your monthly mortgage or rent, utility bills, medical bills, groceries and transport. To start the journey, put away a bit of money every time you get paid, even if it is just a small amount. For example, by saving one euro every day, you’ll have saved €365 in your rainy day fund within a year.
It all adds up, creating a fund to help you when you need it.
Protect what matters most to you
Many people do not realise the financial impact that an unexpected serious illness, injury, loss of income or premature death can have on individuals or family finances. While we prefer not to think about these things, the reality is that they impact individuals and families on a daily basis.
We insure our home, our car, our holidays and sometimes even our family pets. But we sometimes forget to protect ourselves, and our families.
Before you focus on what you do not have, work out what you already have in place and does it suit your family and current life stage.
Having financial protection in place for the things that matter most to you can bring peace of mind. It is important to get professional financial advice to help you tailor your protection plan to your own specific needs.
ProtectionOne last thing
It’s best to plan for life’s uncertainties, so that you can cope when the unexpected happens.
Building financial resilience takes time. But by taking these three steps, you’ll be well on your way to a more resilient financial future.
