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Building Financial Resilience

Posted July 20, 2018 by MoneyLink

Feeling stressed about money? Here’s how you can build your financial resilience.

There are always bills to pay and most of us keep them well under control. But there are times in life when we feel some pressures, especially if a big expense comes out of the blue, or we’re faced with a reduced income through job loss or changing life circumstances.

The trick to coping at these times, is developing financial resilience.

What is financial resilience?

Financial resilience is the ability to manage when life impacts our finances.
Events, both good and bad, can be costly, and sometimes we can find ourselves unprepared.
Quite simply, financial resilience is the ability to bounce back from financial shock.

Australia has enjoyed solid economic growth for the past couple of decades. But despite this, a recent survey on Australia’s financial resilience from the University of NSW’s Centre for Social Impact (CSI), supported by NAB shows that many Australians are financially vulnerable.

Why? Changing working conditions, rising household debt, easy access to credit, increased overall living costs and low wage growth, have all contributed to this. The survey found a significant decrease in the number of people who are financially secure compared with the previous year (35.7% in 2015 down to 31.2% in 2016).

The study also found almost one in three Australian adults (31.6%) had no savings at all or were just two pay packets (less than a month’s savings) away from serious financial stress if they were to lose their jobs.

That all sounds like bad news. But the good news is that you can actually develop financial resilience, in order to create stability.

Creating financial resilience

Creating financial resilience starts with understanding your current financial position – and then putting in place good, solid, workable strategies to ensure you are meeting day-to-day financial commitments, reducing debt (especially expensive debt like credit cards, and other types of finance such as rent-to-buy schemes and car finance), as well as saving what you can to create a ‘buffer’ for life’s unexpected twists and turns.

Educating yourself is imperative. The Australian Investment and Securities Commission has good resources that are freely available through its MoneySmart website – there is information from a range of topics such as managing your money and understanding the jargon as well as the terms and conditions of loans and credit, as well as insurance.

A financial planner can also help. A planner can offer you a range of options depending on your circumstances.

A simple review of your mortgage, or debt consolidation (where all of your loans are bundled into one lower-interest payment) can really make a difference to your financial health. A financial planner can also make sure that your superannuation is performing well, and help you to put a budget and a savings plan in place.

A planner will also offer you advice about adequate insurance to protect yourself and your family if something unexpected occurs.

If you are in considerable financial duress, you can contact the national debt hotline.

If you’d like advice about your personal circumstances, contact us.

This is general advice and should not be treated as personal advice. Russell Tym is an authorised representative of MoneyLink Financial Planning Pty Ltd ASFL No: 247360.

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