Three ways to boost your financial resilience

Tom Bradshaw

Private Client Adviser

Financial resilience is a crucial tool to navigate life’s uncertainties, еspеcially in our еvеr-changing world. Financial resilience allows you to weather unexpected economic storms, minimise stress, and confidently plan long-term goals. We explore three ways individuals can develop financial resilience and stability.

1. Prioritise financial wellbeing:
Financial wellbeing involves achieving a sense of security and peace of mind within your financial life. It consists of various aspects that many are already familiar with: budgeting, managing debt, and minimising stress to build a healthy relationship with money.

Begin by understanding your whole financial situation and develop a budget that aligns with your values and priorities. This will allow you to direct your money towards things that truly matter to you, whether it be a family holiday, paying off the mortgage or saving for your dream retirement. Engaging in mindful spending can ensure your purchases align with your overall financial wellbeing. For example, being conscious of the items you spend your money on, whether they are really needed, do they add meaning or value to you?

The next step is understanding and addressing the sources of financial stress. First identify the factors contributing to financial stress. These could include insufficient retirement savings, inflation, estate planning, investment performance, through to financial burdens of looking after any dependants (young and old). Seeking assistance from a financial adviser can help, as they can guide you through various strategies tailored to your situation.

Debt is also a big financial stress for many and responsible debt management plays a significant role in achieving a good financial wellbeing. Create a realistic budget that prioritises your income and focus on paying off high-interest debts first. If you need to, review your discretionary spending to see whether there are any temporary cuts you could make to free up more of your money until any debts have reduced to a manageable level.

2. Establish an emergency fund:
Creating an emergency fund is a fundamental step towards financial resilience. Emergency funds act as safety nets for unexpected expenses, such as household bills or a sudden change in your circumstances.

To build an emergency fund:

  • Set a clear savings goal.
  • Determine an achievable monthly savings target by analysing your incomings and outgoings.
  • Reduce and review unnecessary spending and redirect any saved funds into your emergency pot.
  • Automate your regular contributions to help you stay disciplined and save consistently.

To establish a robust emergency fund, we would suggest saving at least three to five months’ worth of living expenses. This ensures that individuals have enough cushion to stay afloat during challenging times without resorting to debt.

3. Develop a long-term financial plan:
Building a solid financial plan can help you navigate life’s challenges and milestones, whether you’re saving for retirement, protecting your wealth, or funding your children’s or grandchildren’s education.

Start by defining your long-term financial goals ─ set specific objectives and assign realistic timelines. After you’ve defined your goals, it’s essential to regularly review and adjust your financial plan based on changing circumstances and market conditions.

There’s a lot to consider, from investment strategies to tax planning and overall financial decision-making. A financial adviser can help you research and consider the most suitable savings and/or investment options that align with your goals and risk tolerance, enabling you to stay on top of and achieve your financial ambitions.

It’s important to remember that building and maintaining financial resilience is a lifelong journey that requires commitment, adaptability and self-awareness. The efforts put in now will pay off over the long term, giving you peace of mind and a brighter financial outlook.

If you have any questions about financial resilience, Origen’s advisers are always here to lend a hand.

CA10419 Exp:08/2024

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