Building Financial Resilience

With so much access to financial information now, how do you know where to start?

Here are 5 simple concepts to get you tracking towards building financial resiliency.

UNDERSTAND YOUR CASH FLOW

• calculate how much income is coming into your house after taxes, include you salary, your bonuses, any government benefits ( i.e. child tax benefit), your side hustle income, income tax returns, etc.
• calculate how much money you are spending on living expenses, debt, groceries, savings, insurance, gas, shoes, take out, make-up, subscriptions, basically the whole 9 yards.
• Subtract your spending from your income.
• You will either be in positive or negative cash flow, adjust accordingly
• If you have money left over, where can you put it to work? Emergency savings, saving for a holiday, paying down some debt., putting money into long term investments. Put it to WORK!
• If you don't have money left, or you are in the hole, it's time to assess your situation and then determine the options you have available. Does your income cover your basic committed expenses, your food, your transportation? Is there any money left over? If not, you will either have to increase your income or decrease your spending. Or both.

YOUR RAINY DAY FUND

• Otherwise called an emergency fund, it's there to cover the unexpected, emergency repairs, car repairs, replacing an appliance, a job layoff.
• Automate deposits into this account
• The goal is 6 to 12 months of what you need to live. ( yes, I know I'm recommending more than most)
• This money should be sequestered away in a separate account
• Look for a high interest savings account
• Having emergency savings will bring peace of mind, and you won't have to take a loan or put an emergency purchase on your credit cards.

YOUR DEBT FREE DATE

• Calculate your debt free date

Here is a simplified process:

• List all your debt, including credit cards, loans, mortgages.
• Write down the minimum monthly payment, and the interest rate for each debt.
• Determine how much money you can find in your monthly cash flow to pay towards debt.
• Decide if you want to tackle high-interest debts first (the avalanche method) or start with the smallest debts (the snowball method).
• Use an online calculator or a debt spreadsheet, input the above numbers and it will calculate your debt free date.

PROTECT YOURSELF WITH INSURANCE

Ask yourself a couple of questions:

Would you be ok financially if you weren't able to work due to an illness or injury?

Do you want to make sure your loved ones are protected in the event of an untimely death?

Next steps?

Find a good insurance advisor

• Complete an insurance needs analysis, for needs at death and for needs in the event of a disability or illness.
• Review any group benefits plan for gaps
• Have your advisor build and explain the available options for you
• Look at your cash flow to determine how much you is available to spend on your insurance planning, you may decide to stop spending on other items to have the available funds to protect yourself and your family.

BUILD A SPEND NOW - SPEND LATER PLAN

Tomorrow is never a promise and you only live once are two refrains that come to mind when thinking about how to live now.

It's easy to get tempted to live entirely in the now, hoping that tomorrow will look after itself.

It makes being intentional with money both harder and more important.

I rarely refer to retirement planning when I speak to people about how they are handling their spending and saving.

I talk about having a spend now - spend later plan.

Take the time to design the life you want to be living now - what does it cost?

Take the time to design the life you want to be living in the future - what will it cost?

You may have the funds you need to live exactly as you wish now and into the future.

For most of us, though, it will require some choice.

Here's how to get started:

• Review the work you did on your cash flow plan
• Automate savings into your rainy day fund (nothing sidetracks a spending plan than an unforeseen emergency)
• Automate saving into your short term reward plan (6 to 18 months) - spend now Giving yourself a reward will keep you on track financially, it's something to look forward to and keeps you connected to your goals.
• Automate savings into your long term investment plan - spend later.
• Review annually.
• If there are several decision makers in the home, have monthly money meetings and review your progress together.

These are 5 simple things to get you started.

• Cash Flow
• Your Rainy Day Fund
• Your Debt Free Date
• Protect Yourself With Insurance
• Your Spend Now-Spend Later Plan

And, as we all know, simple does not mean easy.

I recommend starting with cash flow. Once you are completely in the know of your cash flow, you can start allocating funds where they need to go, to get you to financial resilience.

It won't be overnight, and there will be some adjustments to make.

The freedom and peace of mind you will experience as you become more financially confident will be worth the journey.

Take a step.

With Gratitude,

Maura

I'm Maura Shaftoe, CCS? , QAFP? Behavioural cash flow expertise that lets you do money like it makes sense ? Certified Cash Flow Specialist ? Effective Debt Management Strategies ? Qualified Associate Financial Planner ? Financial Wellness Coach Reach out for a real conversation about money, I'd be honoured.

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