How to Improve Your Financial Durability

Posted On 14 November 2023

Last updated on April 5th, 2024

Financial durability is the ability to financially overcome challenges that come your way. It means that you have resources available to you. These resources are a combination of money, skills, tools, and supplies. In this post you will learn how to improve your financial durability.

There can be emergencies or supply chain disruptions that come our way. While we can’t prevent these, we can be prepared so they don’t affect our life very much. Financial durability gives us the ability to turn a crisis into an inconvenience.

We should have enough money to cover our expenses. Is it your boss’s fault if you miss a bill payment because your paycheque is a day or two late? No. In order to become financially durable, we must take responsibility for our life and our finances.

Money

The first part of financial durability is having money that is readily available to us. This means that it is either physical cash, or money in the bank.

Canoosa Finance promotes the concept of having carrying cash. Cash can be used if you are not able to use your card for a purchase (maybe the store’s machine is not working), or to buy something at a place that doesn’t take cards (like a vendor at a farmer’s market). It could also be used to cover a tank of gas, a replacement tire, or a night in a hotel. In 2023 I recommend three of each: 5’s, 10’s, 20’s, 50’s, & 100’s.

An emergency fund is also needed. This is your cash in the bank. It can be held in savings or as the minimum balance in your chequing account, so the monthly account fee is waived by the bank. Your emergency fund needs to be cash – not invested in anything. Experts generally agree that a person should have 3 months of expenses in the bank. This money comes in very handy if an insurance deductible has to be paid, a paycheque is late, or there is some other emergency that comes your way.

A third way that you can make sure you have money when needed, is to keep a month’s worth of expenses in cash at home. This money is available to you 24/7. You don’t have to go to the bank. A repairman could be paid with cash if they don’t accept cards. This is just an extra layer of protection for you.

Skills

Having skills gives a person independence and confidence. We should all work to develop life skills that we can use in our lives. These are skills such as cooking, cleaning, using technology, repairing things, building things, getting along with others, communication, and financial literacy.

We live in a time when there is so much information available to us on the Internet. A quick search can get us tutorials and how-to videos. As we learn, we can then build on those skills that we already have. Often, the skills from one area (following a food recipe) can be applied to other areas (assembling a bookcase).

Now, we don’t have the time to do everything ourselves. We should still know how to do them. We also need to know our limitations and when we should call a professional!

Tools

These go hand in hand with skills. We need to have the tools to go with the skills that we have. Tools, though, are a very broad topic. Common tools are hammers, screwdrivers, and wrenches. They can also be cookware. A USB cable, flash drive, and an HDMI cable can also be considered tools. A financial tool can be a credit card or a line of credit. Basically, a tool is anything that helps us do something.

When we have the tools, the skills to use them, and know when to use the correct tool, we have power. We can make things and we can make things happen! Tools should be added to our lives as we go. Don’t feel like to have to run out and stock up all at once.

Supplies

An important part of financial durability is the 1-Up System. When we maintain a full pantry and freezer, we have food to eat. Rarely do we run out of something at home. Having an extra item (or two!) at home gives us peace of mind. We can also add an item to our shopping list (a month or more before it’s needed) and look for it when it is on sale.

Staying stocked up does not just apply to food. We rarely let our vehicle gas tanks get below a quarter tank. My phone only goes below half a change on occasion. I have a hunch that people always have a low phone battery tend to have bank account balances are maintained at similar levels.

Financial Literacy

How much do you know about how money works? Even those who know a lot about money tend to keep learning about it. There is always more that we can learn. Money is what makes the world go ‘round. To put ourselves in a position to win, we need to self-educate ourselves about finances.

Ben Franklin said, “A person who understands interest earns it, a person who doesn’t understand interest pays it.” How interest works is an important thing to know. So is learning about how credit reports and scores work. Learn how to have an excellent score.

Some things with money can be boring. I get it. The thing is, that money can affect all the other aspects of our lives. You don’t have to become a financial genius – just good enough to come out ahead.

Have Options

Financial durability means having options available to you. It means you have more than one way to do things financially. Say you put most of your purchases on a rewards credit card so that you are getting paid for spending what you would normally buy. It feels good to also have the cash in your pocket so that you could pay that way as well.

When we have cash in our pocket, money in the bank, food in our house, and gas in the car, we have a level of confidence that we can handle what comes our way. We can have a gap in our income while we wait for unemployment to kick in. There can be supply chain disruptions or a natural disaster. It doesn’t matter what happens to us, when we know that we can handle the challenges that come our way.