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Monday, October 7, 2019

10 Practical Planning Tips for Developing Financial Resiliency

No one can predict when the next recession may hit our economy. What the experts will tell us is that we have been experiencing a long period of good economic conditions, and recessions do invariably come around as part of the cycle. In addition to recessions, many of us have experienced temporary and permanent job losses, often times without much warning. 

My household's experience with job reduction this past year taught me that while we had been doing many things right, there were also several areas that we needed to shore ourselves up. Here are my ten, very practical tips for developing financial resiliency, the ability to weather the storms in difficult economic times.


1. Keep a written budget for all expenses. I list this as a first step because knowing where your money is going is critical for reducing spending. With a written budget you can easily identify non-necessary spending or overspending for goods and services. You can also easily see when the cost of a subscription service has crept up, following up with a decision to change service providers if need be.


2. Pay down debt and build some cash or cash-equivalent savings. While cash and equivalents (like bank CDs, and U.S. government Treasury bills) typically have a low rate of return, they are also low risk and readily convertible to cash. When economic times are strong, credit flows freely and as consumers, it is easy to take on debt, thinking that the good times will continue and we will be able to pay back this credit. 

How does a person pay down debt and/or build savings when each month feels like there is barely enough to get by? Earmark any windfalls, financial gifts, or new income for debt payment and savings. See item number 6 to generate ideas for bringing in new income. In addition, you can make a few, discreet reductions in your current spending for discretionary items or experiences each month and bank the amount that you save. I know that I often find myself thinking that there is no where else to cut spending. Then I later find there are several experiences or goods that I can eliminate without any enduring pain. 


3. Build a stockpile of non-perishable foods and basic necessities. The quantity is an individual decision. However, if you feel that an income loss could last for 3 to 6 months, then an amount of basic foods which would carry your household through at least 3 months would be very helpful. 

To get started on building a stockpile, look through your current pantry and identify low-cost foods that you use regularly. Make a list of what you would use in 1 month. Now multiply those amounts for each item by the number of months that you want your stockpile to last. Watch for sales and coupons that allow you to buy these extra foods at their lowest prices and buy your multi-month supply, one item at a time. 

If your situation is like mine, you may need to forgo some of your luxury snack foods in order to afford to buy some items to stockpile. You may have noticed in my grocery plans for the past 8 months I have kept the bulk of the foods that I have bought to basic necessities, yet I have bought some extraordinary amounts of non-perishables such as beans, rice, and flour. This is all part of my overall plan to build our financial resilience in future times of income loss.


4. Take care of your physical and mental health now, while you have adequate insurance coverage. Get exercise, eat right, maintain medical care, get adequate rest, and meditate and/or continue a prayer life. Taking care of yourself will bolster your mental and physical resilience in a stressful period, so that you can tackle the arduous task of job-hunting or increasing your income in a bad economy. Self-care now will also give you the strength and endurance to perform all of those little money-saving tasks that those of us who are interested in frugal-living know very well.


5. Learn new crafts, trades, and repair techniques to not only take care of your own household needs but also to use for barter or another income source.


6. Develop several unrelated streams of income. Some ideas that might work for many of us: 

  • providing a domestic service for neighbors and friends (such as house-cleaning, yard maintenance, pet or house sitting, babysitting); 
  • making (crafts, sewing, woodworking), growing (produce, seedlings), or raising (livestock) something tangible to sell online, in-person, or by consignment; 
  • writing about any topic of specialty to sell to publications or to place on your own monetized site; 
  • rental income, whether just a room in your home, or storage space in your basement, barn, garage, attic, driveway, or a summer house, or property in your own town that could house tenants (people need to store all kinds of things, from very short-term, such as needing a place to park their car for a special event in your area to long-term storage or tenancy); 
  • marketing any special, professional skills as a service; sell your time to a company, such as by taking surveys or becoming a secret shopper; 
  • seeking out temporary jobs, such as working at a fair or festival, or working for the federal government assisting with the 2020 census.



7. Devise a plan, in advance, for how you would remedy an income loss. This is brainstorming time. Think through how you would reduce spending, network and job hunt, and bring in needed income. Look over that written-out budget and determine what you could cut, if need be. 

Spend time researching alternatives to some of your current expenses. Is there a cheaper internet provider that would meet your needs? Could you ditch a smartphone and rely on an old-style, pay-as-you-go cell phone? What can you eliminate from discretionary spending? Could you use one of those new skills to do your own repairs or make gifts? Do you have something you could sell or rent out? What kind of community or organization exists in your career niche where you could network to find work? Where can you go online and in person to find job-listings or help with a resume? Is your resume current?

Keep a copy of an updated resume on your computer and include any new skills that you've acquired (tip number 5). If you don't have this already, set up a professional email, to which prospective employers can link through a digitized version of your resume. Many of us have personal emails, which are fine for personal contacts. A professional email  (which doesn't use a cutesy name/nickname and can be set up through gmail) will support a favorable impression. The best professional emails are straightforward, such as firstname(your given name, not shortened or nickname).lastname@gmail.com. If this format is taken for your name, reverse the first and last names, or use a first initial only. 

You want to hit the ground running in case of income loss. Time is everything. If you have figured out the answers to most of these questions while your income is still intact, you will waste less time finding solutions that work, which means you will need to tap into your savings for a shorter period of time. 


8. Volunteer in your community now. This may not be immediately evident, but volunteer work is a place to make connections as well as do something pro-active to help others in your community. What seems to be an unwritten rule of social interaction is the more you do for someone else, the more that comes back to you. In addition to simply doing good or making connections, volunteer work sometimes results in tangible rewards, such as a free meal while serving meals to others or leftover food to take home.


9. Organize your household. Inventory your supplies, keeping like items together. Repair broken items now, while your "free" time does not need to be put to tasks like procuring food or finding paid work. Knowing what you have in your home will prevent you from buying duplicate items. 

How many times have we all bought something for a repair only to later find that we already owned that needed item? I know I've done that many times. 

As you organize your supplies, take note of store and restaurant gift cards that have balances. Those gift cards could be used to purchase necessities, sell on a gift card resale site, or buy gifts for family and friends. 


10. Develop a thick skin when it comes to the naysayers in your life, those individuals who ridicule your efforts to conserve resources or experiment with new methods to earn money. Everyone's circumstances are different and only you know what you really need to do to ensure your stable financial future. It's highly unlikely that the criticizers or belittlers will be paying your bills. Your money. Your future. Your choice in how to manage both.


Bonus tip: Cultivate gratitude in everything. In the process, you may find that you require far less than you'd ever previously imagined.

12 comments:

Kris said...

Very practical advice. I like that you included looking after your physical, emotional, and spiritual health.

Live and Learn said...

I'm always amazed of what we think we can't do without until we have to. Lot's of good advice. And I see that you fixed it so I can look back at the post while commenting. Thanks.

Making Cents Of It All said...

Great list. I would also add keep an updated resume. Never know when you will need it. Make sure all of your references are up to date with the correct contact info.

Belinda said...

Naysayers...ugh! You know, I wouldn't go onto someone's else's blog and make a derogatory comment about what they eat. But that happens on my blog to the point where I've stopped posting what we eat. And I really enjoyed writing that, so I may just have to do it anyway. Sigh....this was a great blog post, Lili. A lot of good information to have. :)

Lili said...

Kris said...
Very practical advice. I like that you included looking after your physical, emotional, and spiritual health.


Hi Kris,
thank you. And I agree, taking care of all aspects of our health can assist other areas of our lives. Spiritual health is often overlooked when it comes to financial advice. Yet, spirituality helps grow gratitude, changing our perspective, which in itself may alter the path that we choose for our future. In addition, when you feel like there is nothing more you can do to prepare for something major like a recession, taking care of just yourself is always something one can do, and that's empowering to feel that you are doing something.
Thanks for your comment, Kris.

Lili said...

Live and Learn said...
I'm always amazed of what we think we can't do without until we have to. Lot's of good advice. And I see that you fixed it so I can look back at the post while commenting. Thanks.


Hi live and learn,
I know. Sometimes, in retrospect, I feel a bit silly concerning what I previously thought was so vital to keep or buy.

I'd like to take credit for fixing something, but I didn't do anything, except suggest clicking on the actual title of the post at the top of this page. Blogger is very "fickle" and will sometimes work as you expect and sometimes not, for no reason apparent to the user. My best advice to anyone having issues with using Blogger is to just keep trying, because tomorrow the broken thing may be fixed, or using a different browser may solve a problem.

Lili said...

Making Cents Of It All said...
Great list. I would also add keep an updated resume. Never know when you will need it. Make sure all of your references are up to date with the correct contact info.


Hi Marybeth,
thank you for adding a comment about keeping your resume current. I amended my post so it reflects this. Very good suggestion! Thank you!

Lili said...

Belinda said...
Naysayers...ugh! You know, I wouldn't go onto someone's else's blog and make a derogatory comment about what they eat. But that happens on my blog to the point where I've stopped posting what we eat. And I really enjoyed writing that, so I may just have to do it anyway. Sigh....this was a great blog post, Lili. A lot of good information to have. :)


Hi Belinda,
I've been working on my rhino skin for a while. It's hard, though. Sometimes comments feel like very personal attacks. I am trying to remember that we all have different paths and histories. I also try to remember that sometimes I post something that may be meaningful to someone else, even though the comments may not reflect that. Your meal posts may be very helpful to someone else, despite any other annoying criticisms. Keep up your good work!
Thank you for your kind words. I appreciate them.

Anonymous said...

This is good -- you covered many angles. Thank you.
-Stephanie

Lili said...

Stephanie said...
This is good -- you covered many angles. Thank you.


Thank you for the kind words, Stephanie.

Sheri said...

I'm just catching up for the week. I love this! So practical. I think through how we would handle losing one or both of our jobs all the time. I agree with you that doing this could really help out in a crisis. Kinda like having emergency phone numbers in your speed-dial. Love, love, love this article.

Lili said...

Sheri said...
I'm just catching up for the week. I love this! So practical. I think through how we would handle losing one or both of our jobs all the time. I agree with you that doing this could really help out in a crisis. Kinda like having emergency phone numbers in your speed-dial. Love, love, love this article.


Hi Sheri,
I love your analogy, like knowing who to call in an emergency before the emergency happens. Good addition! Thanks!

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