Building Financial Resilience
Preparing for the unforeseen and embracing opportunities
In today’s ever-changing environment, it is essential to be prepared for the unforeseen while also being ready to seize opportunities when they arise.
Firstly, let’s aim to understand ‘What is financial resilience?’
Financial resilience refers to the ability to withstand and recover from unexpected financial setbacks while maintaining a steady course towards your goals. It empowers individuals and families to weather economic storms, seize opportunities and achieve long term financial stability. Being financially resilient means having a robust financial foundation that can endure unforeseen events and adapt to changing circumstances.
Preparing for the un-foreseen
Having an emergency fund
One of the most critical aspects of financial resilience is establishing an emergency fund. This fund acts as a safety net to cover unexpected expenses such as medical emergencies, car repairs or temporary job loss. We imagine many of our clients have had to tap into their emergency funds in the last 12 months to help with increased costs of living and higher mortgage repayments. Common recommendations from financial experts suggest having a goal of saving three to six months’ worth of living expenses in an easily accessible account.
Insurance coverage
It is well known in Australia that about 83% of us are underinsured. Protecting yourself and your loved ones through comprehensive insurance coverage is paramount. Health, life, income protection, and home and contents insurance can provide financial security and peace of mind during challenging times.
Diversifying income streams
Relying solely on a single source of income can leave you vulnerable. As our out of touch Exiting-Governor Phillip Lowe (Chair of the RBA) would have it, he suggests that to combat the increased costs of living you should consider exploring additional income streams such as part-time work, or that younger Australians should either move back home or rent out their study3. Easy to say if you already have a debt-free McMansion.
However, if you do happen to have some spare time or a special skill, freelancing or finding other reliable income opportunities may help you improve your finances.
Managing debt
Responsible debt management is crucial for financial resilience. Last month’s article on managing your debt has suggestions like prioritising repaying high-interest debt, such as credit cards or personal loans, first before other lower-interest debt.
Embracing opportunities
Property ownership
In Australia, property ownership has long been a popular investment option. By building equity in your property, you can leverage it to access additional funds for investments or other financial endeavours.
A well-planned property investment strategy can open doors to capital growth and additional income opportunities. Consider seeking advice from our qualified property specialists and financial planning connections to develop a property investment plan that aligns with your goals, risk tolerance and time horizon.
Education and upskilling
Continuously developing your skills and knowledge enhances your employability and opens doors to new opportunities. Consider investing in further education, attending professional development courses, or acquiring new certifications to stay ahead in your field.
Maintaining financial resilience
Regular mortgage health checks
Schedule periodic reviews of your mortgages and overall debt position to ensure you remain on track toward your goals. Regularly assess your income, expenses, investments, and insurance coverage to make necessary adjustments and seize new opportunities.
Budgeting and saving
Consistently monitoring your expenses and creating a budget allows you to identify areas where you can cut costs and save more. Cultivate a habit of saving by allocating a portion of your income towards your long-term goals.
Many lending institutions encourage you to have separate bank accounts to allow for your daily spending to be separated from your savings account and earn you better interest.
Stay informed
The financial landscape is dynamic and staying informed is key. That is why we like to bring you our educational updates each month on property and finance.
There are many ways to educate yourself about personal finance, investment strategies, and market trends through books, podcasts, reputable websites, and seminars. The more you know, the better equipped you are to make informed financial decisions.
Budgeting and saving
It requires dedication, discipline, and adaptability. By preparing for the unforeseen and embracing opportunities, you position yourself for better financial outcomes over the long term.
As your finance specialist team, we are committed to assisting you in achieving your finance goals and navigating the path towards greater resilience.
Remember, being proactive today will help secure a brighter and more prosperous future.
If you'd like help with assessing your personal and financial situation, as well as comparing the loans in the market to see if you're truly getting the right deal for you, then call Bob Malpass now at 0431 862 136, email [email protected] or send us a message via our website for a quick response.
Thanks for reading
Bob
Disclaimer
The advice provided on this website is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. If any products are detailed on this website, you should obtain a Product Disclosure Statement relating to the products and consider its contents before making any decisions. Where quoted, past performance is not indicative of future performance.
Malpass Finance Pty Ltd disclaim all and any guarantees, undertakings and warranties, expressed or implied, and shall not be liable for any loss or damage whatsoever (including human or computer error, negligent or otherwise, or incidental or consequential loss or damage) arising out of or in connection with any use or reliance on the information or advice on this site. The user must accept sole responsibility associated with the use of the material on this site, irrespective of the purpose for which such use or results are applied. The information on this website is no substitute for qualified financial advice.
