Financial resilience – Summing it all

As we had seen, passive savings and narrow investment portfolios may be very efficient but they do not build resilience. Being financially resilient is hard work, maintaining the socio-economic status after unforeseen events is the key factor.

Photo by Engin Akyurt on
  1. As a salaried person, understand and tune the skills to the market that will keep us employed for a long time. Each economy is different and is dynamic, mindless savings to aim for early retirement will put a strain on mental and physical well being. Once we do not work, the cash flow stops and we would not realise how fast the reserves deplete. Aim for resilience, sustainable lifestyle than early retirement. More here
  2. Cheap loans are everywhere, which will tie you to hefty monthly repayments. Any thing that demands a huge monthly outflow puts a dent in the resilience. Try saving up, if possible fund big purchases like car and homes with as less loans (or lesser tenures) as possible. More here
  3. Resist the temptation to succumb to marketing. Think like a Finance officer, not as a Marketing Executive who has a budget to spend on improving brand recognition. It is your money to be invested at your discretion for your future self, don’t be hard on your future self and end up disposing of what is in hand. More here
  4. Risks are difficult to understand and mitigate. Tail risks are even harder to imagine and plan for. Unless someone diversifies their portfolio of savings and investments along with insurance, safety gears, high quality equipments, healthy habits etc, it is hard to mitigate. It is inefficient to be resilient, but resilience keeps you afloat in dire situations while efficiency drowns you. More here

Summing it all up, realise the concepts of resilience as early as possible. Nothing is too early to learn when it comes to finance. Try to pass on this knowledge to the young ones as soon as possible in a practical way so that they don’t have to learn the hard way. I realised this as an intern in a different town, who was sick in the middle of the month, no cash in bank, hefty credit card dues. Luckily came out of that mess, but learnt a very valuable lesson and changed how I look at finance forever.

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