Expecting the unexpected has a whole new meaning this year. Many of us have experienced an upheaval in some area of our lives, whether it is through a change in employment, relationships, health, geography, or our money. When these unexpected events occur, it can take even the best planners off guard, not to mention those of us who never saw it coming. While any unexpected event can impact us in a variety of ways, these events can set us back in ways we hadn’t seen coming when it comes to our finances. Given that, how can we better prepare ourselves for future unexpected events? We can start by paying attention to the Three R’s of sustainability.
Ever wonder why it is that some people seem to be in a state of denial about all the possibilities that could affect their lives? Whether it is that some feel that nothing bad will happen to them, or that someone else will step in to make it all better if it does, denial doesn’t serve you. Ask yourself, what is it that you are resisting that is keeping you from getting into action to prepare for the unexpected? What are the blocks? The easiest way to overcome resistance is to name what is keeping you stuck. Identify it and ask yourself, “If something bad happens, is this reason going to be enough to justify my lack of action?” When we name it, we can tame it. All it takes is one small nudge forward to get you into motion. After you take that first step, you may find the next ones become a little easier.
Right now, my workouts have been critical to my sanity and my health. I know that by working out and eating well, I put my body in a better position to handle an illness that might occur. Just a few weeks ago, my workout leader, Tracy Anderson, gave a pep talk at the end of our weekly video and she said something that really resonated with me. She said it is difficult to get back to a place you never were to begin with. That struck home. Keeping up with our health is key, but so is realizing that in order to be resilient with our money, we also have to put ourselves in a position to bounce back to a place that was already on solid ground .
If you are struggling to get ahead with your savings, retirement plans or continue to battle a cycle of debt, then if an unexpected event happens, you may find it even harder to bounce back. You know the old saying, “getting kicked while you are down.” It can often feel like that if you are blindsided by an unexpected event. Even if you are the toughest and most resilient person in your friend group, having a strong financial foundation in place can fortify you so that an unexpected event doesn’t have to spell catastrophe.
Most people think of the definition of redundancy as repetition. But the real definition of redundancy is something that is unnecessary. Saving for that rainy day or setting money aside in a liberty fund may very well feel redundant when things are going well, but all of a sudden can seem super important when an unexpected event occurs. Redundancy with your money allows you to have sustainability—to maintain your current lifestyle or keep you from having to make big financial moves in the middle of a crisis. To put yourself in the best position to handle an unexpected event, you should strive to have some redundancy in your financial picture.
A liberty fund is a great way to do that. A liberty fund is money that is set aside to allow you the liberty to get through a period of time without having to make rash decisions or take unnecessary risks. It gives you freedom to make intentional choices. It provides you time to consider all the available alternatives.
When asked how much money should be in a liberty fund, I would ask you to answer that for yourself. How much money would you feel comfortable having set aside that could get you through six months? For some, it could be having enough to cover just those fixed expenses, while for others they may feel more comfortable being able to keep things the way they are for six months without having to make any major financial cutbacks. The choice is up to you. Six months may seem like a long time, but when you are looking for a new job, leaving a relationship, or starting a new business, you may appreciate not having the added pressure of having to stress about how fast the money is running out. When you put into practice redundancy, you get to take the time you need to level set what you are feeling, thinking, and doing before you decide.
Creating sustainability in times of uncertainty or unexpected situations can provide enormous peace of mind. It can also give you the strength needed to fight resistance and be resilient. By taking that one small step towards action, you can feel more confident to face whatever comes your way.