Building Buffers: Finances
“We are living with added financial stress, when often we don’t need to.”
When I announced that increasing my financial literary and investing potential was an aim for 2024, I got a lot of private messages saying ”me too”. Even more of you asked for advice.
“I’m like an ostrich with it’s head in the sand, I know nothing about money.”
“I have no idea how much money I have for retirement.”
“I’d like to save more but I have so much [consumer] debt.”
“My partner takes knows this stuff, not me.”
We are living with added financial stress, when often we don’t need to. Lofty statement I know. The rebuttals are already arising. Stay with me here, because even if the argument is that the current economy sucks, well yes, it ebbs and flows like most things in life. We knew that it would. So why not prepare for these moments?
Instead we are tempted to live at the upper limits of our financial means, stress levels, disconnectedness, and ability to mistreat our own bodies. What happens when we live this way? We can’t catch a break. A flat tire breaks the bank. Stress becomes illness. Communities disconnect from each other. Any new hurdle, no matter the size, becomes unmanageable because there are no buffers in place to withstand them. No emergency fund. No general good health. No connected community to lean on.
Let’s change that.
Radical Reduction™ and Building Buffers Recap
Radical Reduction™ is an immediate action that you can take either in the face of overwhelm to regain your footing or at any time to set the foundation in building buffers to help you manage future adversities. You can read more about Radical Reduction™ here.
Building buffers is exactly as it sounds, you’re building buffers in the areas of finance, social, knowledge, health, or environment to increase your ability to manage future hurdles in life.
This is part of a series on building buffers, a concept aimed at increasing resilience and personal agency. High Agency Human™ is the manageability of life’s hurdles.
What is a financial buffer and what does it have to do with adversity?
Can money buy happiness? Debatable. Can it stop a bad moment from becoming worse? Often. When I’m talking about building a financial buffer, I’m actually talking about increasing your ability to handle unexpected financial demands in three specific ways, by creating a robust emergency fund, eliminating or reducing debt, and increasing investments.
I’d even add a fourth type of financial buffer, and that’s making sure you have the right type of insurance (health, life, employment, etc).
Instead of living at the edge of our financial means and credit capacity, we move towards the limits that set us free – our financial growth and investment potential.
Having a healthy financial buffer is less stressful and it means you can financially deal with whatever unexpected expenses or losses come your way.
“You either master money, or, on some level, money masters you.” –Tony Robbins
How to build your financial buffer
Step 1: Complete a Radical Reduction™
Do an audit on all earnings and expenses to have a full view of your current situation. Find areas that you can either reduce to save money or increase to earn money. This includes researching service providers for better deals, checking organizations and affiliations (ex: does your university offer alums deals on insurance?), and identifying your long-term goals.
Step 2: Ways to save extra money
Reduce spending by eating homemade meals, cancelling subscriptions and memberships, or renegotiating bills. Challenge yourself to a no-send month. Carpool to work or events.
Step 3: Ways to make extra money
Increase earnings by leveraging your current skills and selling services/products (aka building websites or selling sourdough bread), selling household items that you no longer use, or working extra hours/jobs.
Some ways to earn extra money:
offer to pet sit through @roverdotcom
list your home or extra rooms on @airbnb
get a housemate and rent out that extra room
sell your home/downsize
bring clothes to consignment
sell used books on @amazon
sell unused home equipment
rent out your tools/equipment via @rentmyequipment
rent out your yard/pool for gatherings or celebrations
rent out your yard as a private dog park via @sniffspots
become an Amazon Flex Driver
become a delivery app driver
use skills you already have to teach a workshop
Step 4: Celebrate
Celebrate with your family and friends, it’s a win to push the financial needle towards your goals. Tag @highagencyhuman on Instagram with your win!
Beliefs and Mindset
Explore your personal behaviour and beliefs around spending. To help you stay on track, check out 2 Questions and 3 Rules for Spending This Season. Move forward with less financial stress, healthier coping strategies, and enough self-compassion to do this again if you find yourself back at the start.
Moving forward
There are four things to consider while or after building your financial buffer, decide on a debt reduction strategy, create a budget, and track progress.
Step 1: Decide on a debt reduction strategy
Step 2: Create a budget
Step 3: Track progress
I track all my spending and review it monthly. Every. Single. Penny. That’s single my preferred method of staying on track and avoiding the temptation of the ignorance-is-bliss trap. Beside the monthly check-ins, there’s also an annual review:
annual budget drafted
subscription review + cancellations
investments review + plan ahead
will, life insurance, health insurance
Tracking will help you make sure your efforts and habits are aligning with your goals, and allow yourself room to adjust along the way.
Accountability and Community
Have a partner and share financial responsibilities? Make it a monthly date and review your habits, goals, and adjustments together.
Want family and friends in on boosting financial literacy and buffers? Find yourself some money buddies, and meet up to review goals and progress. Discuss what you’ve learned and how you’re adjusting. Work through hurdles together. Share resources and ideas.
Resources
I’m not a financial expert, what I am good at, is starting over from the bottom and doing well. You have to be all in and decide that this is your season to boost your finances. Part of doing that is increasing your knowledge around finances and being very very clear about where you are, where you want to go, and how you’re going to get there.
Here are some of the resources that I find helpful
Retirement calculators like Sun Life or the Government of Canada
Books such as Psychology of Money by Morgan Housel, Rich Dad Poor Dad by Robert T Kiyosaki, Profit First by Mike Michalowicz, Think and Grow Rich by Napoleon Hill, Your Best Financial Life by Anne Lester, and Subtract by Leidy Klotz
Try surrounding yourself online with content that will fuel your efforts to get to where you want to go. Turn your socials into an environment that helps versus hinders you. Check out these financial experts:
Steven Chen @calltoleap offers helpful tips and check out his free Guide and Money Cheat Sheet
Anne Lester @savesmartwanne just released her new book Your Best Financial Life or take her free Understand Your Money Type quiz
Robert Croak @robertcroak and Austin Hankwitz @austinhankwitz team up to host the Rich Habits Podcast
Other experts that I enjoy learning from include @clobaremoneycoach, @financiallyintentional, @mattthemoneyguy @delyannethemoneycoach, and @georgekamel
LET ME KNOW YOUR RESULTS!
Feel free to tag me on Instagram or email hello@vickiemlanthier.com with your adventures in Radical Reduction™ and feedback.