Financial Resilience Is More Than an Emergency Fund
Having an emergency fund is an important part of being financially prepared, but it’s only one piece of the puzzle.
In this edition of The Money Brief, Reagan is joined by Ashleigh from enable.me to explore what financial resilience really means and why protecting your income, understanding your commitments and planning for different scenarios can all play a role.
Understand What You Need to Keep Life Running
A good place to start is understanding your cash flow and the costs you need to cover each month.
Look at your fixed expenses, such as your mortgage and essential household costs, and consider how those could change over time. For example, how would different mortgage interest rates affect the amount you need to find each month?
An emergency buffer can provide some breathing room if your income suddenly changes. But it’s also worth thinking beyond the immediate financial shock and considering how resilient your income itself is.
Think About the Bigger Picture
Your ability to earn an income can be one of your biggest financial assets.
Consider what might happen if your role changed, your industry was disrupted or you were unable to work for a period of time. Keeping your skills current and understanding changes in your industry can help you prepare for shifts in the employment market.
It can also be worth considering what protections you have in place if illness or another unexpected event affects your ability to work. Depending on your circumstances, that could include reviewing insurance such as income protection.
Plan for the Scenarios You Hope Won’t Happen
Some financial conversations can be uncomfortable, but planning ahead can help you identify gaps before you need to rely on your financial safety net.
If you share finances with a partner, consider talking through scenarios such as moving from two incomes to one, losing a job or being unable to work.
The goal isn’t to predict exactly what will happen. It’s to understand what you have available, what you need to protect and where there may be gaps in your plan.
How Resilient Is Your Financial Plan?
Preparing for the unexpected is about more than building up savings. Understanding your cash flow, income risks and financial commitments can help you see where your plan may need strengthening.
A financial consultation with enable.me can help you understand your current position and the steps you could consider to build greater financial resilience.
Watch the Full Episode
Watch the full conversation for more on emergency buffers, protecting your earning capacity, managing financial risks and planning for unexpected changes.
Disclaimer: The Where’s My Money? podcast and the information shared by host Reagan White and his guests does not constitute individual financial advice. If you’re interested in receiving financial advice, you can book a consultation with an enable.me financial coach. Costs apply.
