What is financial resilience?
Life is full of events that can affect your clients’ finances: job loss and changes to physical or mental health are some common examples. How they bounce back from a financial shock determines their level of financial resilience.
‘Resilience’ is an increasingly common term used by professionals in the areas of health, natural disasters, education and community infrastructure. It’s a dynamic process that lets individuals bounce back after difficult events and experiences. It allows them to adapt to changing circumstances, and to deal with environmental stress. Therefore, it’s more about adaptability than stability.
Financial resilience is measured by someone’s ability to draw on the skills and know-how they already possess. It’s also about their ability to access appropriate support in times of financial difficulty.
What does the research measure?
This research identified four factors that produce financial resilience when they work together:
- economic resources
- suitable financial products and services
- financial knowledge
- behaviour and social capital