5 simple tips to help you build financial resilience

Estimated reading time
 5 min

In this article

• Why financial resilience is important
• Five tips to help you grow your financial resilience

When life feels like it’s spinning out of control, having good financial resilience can make a world of difference.

In a nutshell, financial resilience is your ability to cope with financial shocks or bounce back from these challenges. When times are tough and unexpected expenses start cropping up, having this resilience can help you rebuild your financial situation from the ground up.

So, what can you do to start building financial resilience? We’ve got five simple tips and tricks you can follow to help you be financially brilliant and resilient.

1. Save a dollar a day (or whatever amount you like!)

Regularly saving and building up your savings over time can help you have a hearty amount of financial resilience. It doesn’t have to be a large amount that you put away each week or month into your rainy day fund – something as small as a dollar a day can quickly add up over time. The main thing is to keep saving regularly to build up your emergency fund, no matter how much you put away. So, when things don’t go according to plan or you need to pay for an unplanned expense, your emergency or rainy-day fund can cover the costs and save the day.

To get the most out of your savings and build some good resilience, choose a savings account that has high interest rates or offers you bonus interest (or both!). That way, your savings have more chance of growing thanks to the good interest rate on the account.

2. Budget and plan for the unexpected

Having a sound budget can help you understand where your money is going, so if life does take a sudden turn you’ll know where your spending can change. For example, if you recently acquired an injury and can’t work, you can look at your budget and decide what you can cut back on to pay for the new influx of medical bills.

If you don’t have a budget yet, then that’s okay! You can use our simple budget planner to make a detailed budget within minutes, so you can start being financially agile for those unplanned moments.

Hot tip: Financial literacy plays a huge role in your financial resilience. If you keep learning new saving techniques, growing your budgeting knowledge, and learning a few money terms, then you’ll be on the fast-track towards strong financial resilience.

3. Get on top of your debt

Loan repayments and other financial commitments can quickly eat into your finances. And when an emergency strikes, paying off your debts might be the last thing on your mind when you’ve got a lot on your plate. That’s why managing your debt or creating a debt management plan now can put you in a good position for financial resilience later.

The best part is that there are different debt management strategies you can use depending on your personal situation:

• Focus on the bigger debts first by paying the minimum on your smaller debts and put every dollar and cent towards that large debt. Once that’s cleared from your plate, you can move onto your next most-expensive debt.
• Start with the smallest debt you have first and work your way up towards the largest. You might feel chuffed seeing your list of debts dwindle while your savings grow.
• Consolidate all your debts into one loan repayment. You can chat with your bank or accountant to work out what’s the best approach for you.

4. Check your insurance policies

When a financial emergency happens, see if your insurance policy can give you a helping hand. For example, if your home gets flooded you might be able to make an insurance claim to help cover the costs of repairs. Or if you lose your source of income due to illness and injury, then your insurance policy might set up a payment plan to support you financially. It always pays to check and understand what supports you can access when things go south.

5. Keep your attentional bias in check

If you’re experiencing a financial emergency, it might be easy to fixate on the negative because of the stress on your finances. For example, you might check your bank account to see if your savings have dropped more than you initially thought because you had to pay some bills at the last minute (but can’t add to your savings because you were made redundant). But this focus is only fuelling the fire of your money stress and anxiety, which can negatively impact your financial decision-making skills.

This is what we call attentional bias – a pattern of thinking where we’re drawn to certain types of information compared to others, like focusing on the negative over the positive.

For someone building financial resilience in case of an emergency, it’s important you focus on your financial growth (no matter how small) and feel encouraged to maintain your progress and sense of stability. This can help reduce your financial pain points, so that when an emergency does happen, you can adapt swiftly and resiliently. It’s also important that you focus on self-care to avoid financial burnout – treat yourself to something small, look after your mental health and keep doing the things you love doing.

So if you keep up your saving habits, stick to your budget, manage debt or even check your insurance policies, you can build enough financial resilience to weather any storm that comes your way.