Barbara O’Neill, Ph.D., CFP
Extension Specialist in Financial Resource Management
Rutgers Cooperative Extension
The words “resilience” and “resiliency” have been used frequently since the events of September 11, 2001. Children, families, communities, and the nation as a whole have all been described as resilient, or having the ability to function well and maintain a positive outlook despite experiencing highly stressful events. In everyday language, resiliency is the ability to “roll with the punches” and carry on despite life’s setbacks.
Financial resilience is the ability to withstand life events that impact one’s income and/or assets. Some financially stressful events, such as unemployment, divorce, disability, and health problems affect people individually. Others, such as recessions, stock market downturns, and acts of terrorism, affect society as a whole.
Financial resiliency is enhanced with financial resources, such as savings, health insurance, and a good-paying job. Another resource for financial resiliency is one’s human capital, which economists define as all of the knowledge, skills, experiences, and other personal qualities that people have to “sell” to potential employers.
Social capital also increases financial resiliency. This includes a support system of family, friends, co-workers, neighbors, and others that can provide financial assistance, not to mention emotional support, during hard times.
Following many of recommended financial practices found in Small Steps to Health and Wealth™ can also increase financial resiliency. Below are five examples:
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