What is Financial Resiliency?
Financial Resiliency is the ability to absorb financial shocks and crises. Assets like robust emergency savings accounts, healthy credit scores and low debt-to-income ratios all make up a family’s financial resiliency toolkit. Having these assets is important, but so is knowing how to build and manage them in the first place. Basic financial literacy helps families build a more resilient economic future.
How does this Pathway support families on their journey out of poverty?
As other pathways in our system help increase a family’s ability to earn adequate income, the Financial Resiliency Pathway takes these families one step further by giving them the knowledge and tools to safeguard their progress and their financial futures.
The main areas of focus of the Financial Resiliency Pathway include savings, credit, debt, financial literacy, and good financial management behaviors. These key players work together to help a client progress toward individual long-term goals and holistic financial stability. Programs such as MYMoney@Work and Beyond Belief provide financial coaching and education as a means to increase clients’ ability to manage their financial futures and make strategic decisions with their regular income and assets. Through this pathway, our clients may need to build emergency savings, pay off debt, build a stronger credit score, establish a budget, and more – all in order to maintain stability in the face of an unexpected personal or economic crisis. COVID-19 brought the importance of this into focus for our agency and for many of our clients. We saw financial resiliency in some of our current clients protect them from the harshest impacts of the crisis, while a lack of financial resiliency led to significant hardship for so many other families in our community.
Overlap of the Pathways
In reality, financial resiliency is only possible if you have sufficient income to manage. Stable employment and wage growth are critical, in addition to educational credentials that increase earning power. Therefore, our clients’ financial resiliency journeys often signal to the importance of a multidimensional, systems view in understanding poverty. The powerful nature of the Pathways is that they are flexible, both narrowly tailored and expansive, allowing us to see how different barriers overlap, influence and precede one another.
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