Buddha’s serene smiling through the constant state of change may have more to do with his saving plan and less than his sitting still. Just as Buddha advised, savings (and insurance) and a stable employment situation are the keys to resilience.
If you want to decrease your life stress you may be advised to look towards mindfulness or other Buddhist techniques. But Buddha’s serene smiling through the constant state of change may have more to do with his savings plan and less than his sitting still. How so? Buddha urged his followers to pay their taxes, and then use one quarter of their earnings towards enjoying life (including giving to charity), two quarters for investing in businesses, and one quarter towards savings for an emergency. In that way, you build resilience to life’s unpredictable misfortunes (Buddha’s words, not ours).
Setting aside the smiling sitting guy, many experts suggest that folks focus on resilience to best face life’s unpredictable misfortune. The link between emotional resilience and financial resilience is closer than you may think. Resilience has been a hot topic in parenting and work-life balance advice lately and for good reason. Employees (and their children) can be taught to build resilience. What is it? It’s that quality that allows you to come back quickly from a challenge. It is a set of skills that allow an employee to adapt to stress, trauma or adversity, without significant reduction in energy or wellbeing. Emotionally, it can be gained through cultivating positivity (through intentional optimism), strengthening analysis and self-reflection, and encouraging employees to focus on long term goals with realistic execution plans. Supportive relationships, healthy families, and positive role models also help foster resilience. Other experts cite being organized and flexible at the same time as key attributes of resilient people.
Goal setting and problem solving, as well as accepting that roadblocks or speed bumps may occur as you move towards those goals, is critical to fostering both emotional as well as financial resilience. Financial resilience is usually defined as the ability to withstand setbacks that adversely impact income or accumulated wealth, like assets.
Employers can help employees foster financial resilience through asking those employees to consider their own specific needs as well as which types of financial events would be the most stressful for them. This could be facing unemployment for one employee while another might cite the loss of a spouse. Asking employees to consider the key resilience characteristics – positivity, self-reflection, and long-term goals - in how they might respond, rather than merely just responding with how to survive, can help employees identify what they need to build resilience.
Just as Buddha advised, savings and a stable employment situation are the keys to resilience. Economists also add to this list the training, skills, networks, and capabilities a person has in his or her field. Obviously, issues of privilege, like race and class, factor into financial resilience as one group may face fewer barriers to employment than another, and therefore face less adversity if their industry became more dynamic or downsized.
How else can employers, and plan sponsors, help employees increase financial resilience? Many advisors recommend avoiding or reducing debt as a crucial first step. Others recommend that same emergency fund that Buddha advised that the wise seek (though maybe not at 25% of an employee’s income). Others suggest seeing job training as resilience building, as it can help employees feel that they will remain employable even in a dynamic industry. Some experts also suggest encouraging employees to diversify their income streams. Just as the smiling sitting guy suggested using wages to invest in businesses, today’s financial resilience experts suggest finding secure sources of income to help weather unexpected financial events. Diversified income streams may not need to be as extreme as getting a part-time job on the weekends, but could include babysitting for friends from time to time, or investing in a stable business in your neighborhood.
Just as psychologists encourage people to engage in self-reflection and analysis to boost emotional resilience, some experts also suggest that employees track spending and costs. In fact, the US Army recently launched a Financial Resilience Assessment to its ArmyFit self-development platform to help soldiers (and their families) understand their financial needs as a way to combat stress and increase productivity. That model is available online.
However, the most vital element to financial resilience is the presence of a significant savings account. According to a Pew Charitable Trust Study, many American families with savings sufficient to withstand a surprise financial hit of $2000 or more still struggled after covering the cost. If those families struggled to make up for the financial surprise, it’s reasonable to assume that retirement savings and readiness were impacted in those families for a long period of time. Having a savings account with funds greater than those needed for just an emergency may be the most crucial element of financial resilience.
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