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How to be Financially Resilient?

How to be financially resilient

Financially resilience is probably one of the first things that spring to mind when discussing long-term goals. Every day, we may encounter some critical life events that can significantly impact our finances. Events like illness, unemployment, disability can put you in financial upheaval. However, being financially resilient doesn’t necessarily mean being rich. In fact, when life throws you some curveballs, it is easy to be financially uncomfortable even if you are earning a good living.

Financial resiliency means that you can withstand live events and other financial pressures without turning to bad credit. Good things there are a few easy steps to improve financial resilience. From a good personal finance perspective, here are a few ways to achieve better financial resilience.

How to be financially resilient

Have a financial life plan

Setting up a goal is always the first step. You can do this by listing both short and long-term financial goals. Of course, makes sure that you know how important these goals are to you. When the reasons are clear to your mind, you can use them as inspiration to stay focused on financial behaviors that make a difference.

Build up your emergency fund  

Whatever financial plan you have in mind, make sure to include building an emergency fund in there. Your emergency fund should at least worth at least three months of your living expenses. You can start saving for this emergency fund right now. You can take a few amounts from your salary every month. The entire purpose of this fund is to alleviate the stress of an unforeseen financial hit. Having an emergency fund can also give you peace of mind knowing that you have a safety cushion should things go wrong.

Protect your assets through insurance

Insurance can provide you with long-term financial security. It would be best if you consider getting one for yourself. This will not only protect your assets it can also support your loved ones when you are no longer around. What makes insurance very attractive nowadays is that it’s becoming more flexible, giving us a slew of several other benefits. For instance, Asuransi Online Hospital Cash Plan can’t only cover hospital fees; you can also use this to substitute for lost income due to hospitalization. It also allows you to claim some amount even though your other insurance already covered your bills.

It is worth noting that some insurances can also be used to save for retirement. Right now, VUL or variable universal life insurance is popular. Here, a portion of the money you pay for your insurance plan is invested in stocks, bonds, and mutual funds. As a result, you are not only saving for your future, and there’s also a good chance that you actually make higher returns.

Take care of your debts

You can’t be financially resilient if your debts continue to line up. If a large portion of your monthly income has been cut for these debts, it will be more difficult for you to meet your basic needs, such as food and medicine. Building your emergency savings funds will also be almost impossible. Reduce or eliminate your debts as soon as possible, especially if they are credit card debts or personal loans. They’ll become expensive as you start paying interest. Come up with a plan for which debt you want to clear out first. It’s ideal to start with the ones with the highest interest rates and work your way backward.

Review how you spend your money 

Try to figure out where your money is going. Of course, some of them are set for your basic needs, such as rent, food, and transport. However, other sorts of spending can be categorized as supplementary or luxury expenses. These are expenses that you have control over.

It doesn’t mean that you shouldn’t buy anything other than your basic needs. Understanding how much of your money is spent on these products, on the other hand, is crucial to developing financial resilience.

Improve your understanding of financial concepts

Being knowledgeable on different financial topics is important to maintain financial resiliency in the long term. Such topics aren’t taught in schools, so you need to put effort into learning them. The more you understand, the more you can make a smarter financial decision. Improving financial knowledge is the best way to achieve financial wellness.

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