Business
Developing Your Financial Resilience Will Help You Get Through Hard Times
![Developing Your Financial Resilience Will Help You Get Through Hard Times](https://www.timebulletin.com/wp-content/uploads/2024/02/Developing-Your-Financial-Resilience-Will-Help-You-Get-Through-Hard-Times.jpg)
You may not utilize the safety net that financial resilience offers very often, but you’ll be happy to have it when you do.
According to Emerson Sprick, associate director of economic policy at the Bipartisan Policy Center, a Washington, D.C. think tank, “a household is financially resilient if they are prepared to encounter unexpected financial shocks.”
Costs such as an unexpected medical expense, house repairs, or missed income due to a layoff could be considered shocks. According to Sprick, they are usually “unpredictable in their timing, but we generally know they will happen throughout our lives.”
These are some strategies to increase your financial resilience because we’re all going to experience financial shocks at some point.
Control Your Money Flow
According to Troy Anthony Anderson, who creates extension financial education programs at the University of Maryland in Calvert County, “sometimes we go out and spend without thinking.” As a first step in determining what to reduce, like eating out or going to the movies, he advises tracking exactly where money is going by keeping a journal of spending.
In order to avoid going over budget every time you get paid, Anderson advises making a monthly plan. Consider this: “When I earn my paycheck, do I really need to eat like a king or queen? After the direct deposit clears, you go to Outback or Texas Roadhouse, but the next week you’re broke and have to cook peanut butter and jelly, he says.
Anderson manages his spending by keeping a set amount of cash in his wallet for luxuries and writing out what he can buy with it on a sticky note that he maintains with the money.
Establish A Savings Account
Although many people are unable to accumulate the customarily advised three to six months’ worth of expenses, Kate Bulger, vice president of business development at Money Management International, a nonprofit organization that provides financial counseling and education, says it is worthwhile to aim for some savings.
“Having those savings gives people the runway they need” to get through a tough moment, she says, so the more we can save, the better. Savings can increase over time while remaining secure if they are kept in a high-yield savings account.
According to Sprick, retirement savings can also strengthen long-term financial resilience. A lot of employees can use tax-advantaged plans like 401(k)s and company matching to assist increase their retirement savings. Over the course of years of employment, even a small contribution made each pay period can result in large savings, particularly when the money is compounding.
Protect Your Credit
According to Bulger, minimizing credit card balances might free up credit lines for unexpected expenses. “Credit cards are a great tool to use for short-lasting hard times. Having room on your credit cards lets you use them that way,” she says. Then, you can minimize interest by paying off the debt as soon as possible.
In any case, Sprick cautions that it’s simple to fall victim to “a pernicious cycle of debt and poverty.” For instance, you will spend roughly $5 in interest each billing cycle until you pay off a $300 auto repair cost that you have to charge on a credit card that carries a 20% interest rate.
“Especially right now, with interest rates as high as they are, it’s easy to get caught in a cycle of debt where you never get out,” Sprick says.
Discuss Your Priorities When It Comes To Money
You can better prepare for that situation by talking with family members about how you would handle a financial shock before one occurs, advises Bulger. She recommends the subsequent questions:
- What aspects of our financial lives are the most crucial?
- For what purpose are we saving?
- If we have to make any cuts, what expenses will we start with?
“If you have that conversation ahead of time, it’s easier to make the adjustments,” Bulger says.
However, discussing financial difficulties with loved ones and friends can make you feel less alone on an emotional level. Bulger continues, “Financial hardships can be incredibly lonely even though we know many people are going through financial strain.”
Count On Your Community
According to Bulger, communities frequently have food banks, government assistance programs, and school-based services available to assist those going through a trying time. She also advises using additional tools to support you while you make changes to your spending and saving patterns, such online budgeting tutorials or a nonprofit financial counselor.
Try not to let failures get you down, no matter how you seek help. Similar to the stock market, Daniel Milan, managing partner at Cornerstone Financial Services in Southfield, Michigan, advises concentrating on the future rather than the now.
“We can’t control the day to day, but if you have a plan over the long term, history has shown us that your average over time will work out,” he says.
-
Business4 weeks ago
Step-by-Step Guide to Become Self-Employed: Tips to Start Your Own Business
-
Music4 weeks ago
Kanye West’s Streak of No. 1 Albums Ended with Taylor Swift’s “Tortured Poets Department,” while “Vultures 2” Debuted at No. 2 on the Billboard 200
-
Business4 weeks ago
Traditional Vs Online Banks: What is the Difference and Which is Better?
-
Health2 weeks ago
Dr. Tony Nader Reveals the Fundamental truth : ‘Conciousness Is All There Is’ Uncovers the Cosmic Association Between Modern Science and Vedic Knowledge
-
Business2 weeks ago
General Motors’ Cruise and Uber Technologies Agree to a Multi-year Partnership to Offer Driverless Rides Next Year
-
Health2 weeks ago
The Art of Healing: Dr. Meleeka Clary’s Impact on Mental Health and Human Rights
-
Business2 weeks ago
14 Tips to Grow Your Business Using E-Commerce Email Marketing
-
Tech3 weeks ago
Vantage Brings Expert Trading to Your Fingertips with Copy Trading for New Investors