Friday, February 21, 2014

3 Steps to Surviving a Financial Disaster - Remaining Buoyant

I'm a pessimist, but that part of me is slowly diminishing.

There was a chapter in this book ("To Sell is Human" by Daniel H. Pink) that described a good salesperson's ability to remain buoyant - the ability to float. For some people, the ability to remain buoyant is natural, for others it may not come natural. Well, the truth of the matter is that financial buoyancy can be learned.

I've known a lot of people who have been hit by financial disasters (a result of retrenchments, loss of jobs, major illnesses and risky financial investments). Those who did not have a float drowned, but the others who had a float, went down for awhile and surfaced again.

The latter group of people were buoyant. Here are 3 steps to attaining financial buoyancy:

1) The Emergency Float

The first step to being financially buoyant is to set up an emergency float. If you do not have one, you should start by stashing away 10% (or more) of your monthly income to build up an emergency float that can last you for at least 3 months of unemployment. Too many people overlook this very important step as they think it's not important.

Trust me, you'll be thankful for this stash of cash when everything comes crashing down on you.

2) The Side Gig

If you spend 8-9 hours at work (your main income source), dedicate an additional 30 to 60 minutes of your time towards a side gig. This can be anything that has the potential to generate income in the future: setting up an online business, learning to code, honing some talent of yours, writing a book, etc..

For some reason, if you were to lose your job, your main source of income, you know that you have something else to fall back on.

3) The Freedom Fund

If you do not have a freedom fund, please start one now (read: Freedom Fund). This is the best financial float that you can ever have. The freedom fund is measured by the number of months that you can sustain your lifestyle without an active job. So, the more you contribute to this fund, the more financially buoyant you become.

Share to Facebook Share to Twitter Email This Pin This