Financial resilience: what it is and how to achieve it

Organize and control your personal finances in order to have financial security to face life's unforeseen events, such as the loss of a job.

Jargon is the theme of the National Week of Financial Education (ENEF) this year and can be essential to avoid headaches For the dictionary, resilience is the elasticity that makes certain deformed bodies return to their original form. Bringing it to a more figurative sense and applicable to our life, the term can basically say about our ability to adapt or recover easily.

Over the past few years, you've definitely heard that word at least once. Resilience has conquered texts, messages and conversations recently, becoming a certain “cliché”. And whether you are for or against these “buzzwords”, the truth is that the word itself is very resilient and can be applied in different areas of our lives, including finances.

It is no coincidence that the theme chosen for this year's National Week of Financial Education (ENEF) is precisely “financial resilience”. As well as its general meaning, when applied to the economy, the word basically means the ability to organize and control your personal finances in order to have financial security in the face of day-to-day unforeseen events.

That is, the idea is to know how to organize and think about unforeseen events that may arise to avoid debt and build a healthy relationship with money. It's about being able to adapt with what you have in case new accounts appear around. 

The choice of this theme for the 2022 ENEF goes beyond mere cliché. According to the National Confederation of Trade in Goods, Services and Tourism (CNC) 8 out of 10 Brazilians had debts due in the month of August alone. This year's event begins on December 12th and counts on the participation of several institutions in the country that promote financial, social security, insurance or fiscal education actions and initiatives. 

The topic will be addressed in different lectures, courses, workshops and other actions. The circuit is an initiative of the Brazilian Financial Education Forum (FBEF) and has been held annually since 2014 in order to promote the National Financial Education Strategy.

Understanding better: what is financial resilience?

The relatively new concept emerged with the aim of making people who are going through or who have gone through financial difficulties gain the strength and focus to get back on their feet, even in the face of obstacles.

Experiencing financial problems is extremely common. A survey carried out by the Brazilian Institute of Geography and Statistics (IBGE), for the years 2017 and 2018, in fact, showed that 72.4% of Brazilian families have some difficulty paying monthly expenses, such as bills, food and rent.

With the arrival of the pandemic, this scenario did not have a positive impact. Another study carried out by the Axxus Institute, a technology startup from Unicamp, pointed out that, in 2021, 86% of Brazilians said that finances were greatly affected by the arrival of covid-19.

But, as the lyrics of popular songs around here say, “the show must go on” and that is the idea of ​​financial resilience. The core of the jargon is precisely to equip yourself with information and planning to be able to “shake off the dust and get back on top” when financial challenges appear ahead. It's the art of being able to calmly look at the problem and find tangible possibilities to solve it, instead of going into a cycle of despair.

Talking, however, is easy, and we know it. When bills come up and money isn't enough to pay them, headaches often seem inevitable. The truth is that crises come and go at any time and, most of the time, they are out of our control. Exactly for this reason, it is important to have a certain financial planning, to be able to go through these inopportune moments more calmly.

The idea of ​​financial resilience is at this point. Getting organized, doing math, saving a little, creating investments, to have the famous “sock” when crises appear. It's about creating a balance between earnings and expenses, always trying to predict what problems and difficulties may – and probably will – appear.

The pillars of financial resilience

To help you in a practical way, the accounting company Audiocoplan has gathered on its website some important tips that can serve as pillars to achieve the much-desired financial resilience. Are they: 

1. Strong cash flow management

The complex and most used term in the business field can also be used for personal finance. The idea is basically to seek to create a spending plan, which can be simple, but always well structured. The plan must contain an amount reserved for savings, which brings more security for the future.

2. Have emergency reserves

We never know when the car tire is going to go flat, the bathroom pipe bursts or a sink stops working. Having money saved for contingencies is essential so as not to harm your monthly planning when unforeseen events arise.

3. Debt Management

The idea is basically to be able to organize yourself and understand the extent to which you can get into debt. Yes, debts will appear, but you need to be aware of how many times you can divide this or that purchase and how many items you can buy.