Vanessa Stoykov: 3 steps to building a safety net
- Posted by Palladium Wealth Partners
- On February 15, 2022
- 0 Comments
We are pleased to share with you a special piece from renowned Australian money educator Vanessa Stoykov.
Below, Vanessa explains the importance of having a safety net in place to help weather unexpected financial events—and three steps to consider when looking to build one.
3 steps to building a safety net by Vanessa Stoykov
1 in 3 Aussies doesn’t have more than 1 month’s salary saved for emergencies. Do you worry about how you will survive if you were to be hit with multiple and unexpected bills? The car breaking down? The washing machine blowing up? A medical emergency? If you answered yes, you are far from alone. And mentally, that reality can be extremely tough to cope with.
In fact, people in a recent research report from the University of Melbourne said that outside of the struggle to buy food, coping with the mental health issues stemming from a lack of money was one of the hardest things to deal with.
It’s not a big leap to see how financial pressure can lead to anxiety and mental stress. I’ve been there myself and can still remember how debilitating it felt—and how getting to sleep at night became harder and harder.
With this in mind, I urge you to do these three things to change your situation. Warning—it won’t work overnight. I like to think it’s a five-year process to build your financial fitness on the road to financial freedom. Being financially fit means having a safety net, and avoiding multiple debts to live a less stressful life—and that has a huge impact and improvement on mental health.
- Think long and hard about levers you have to pull to raise enough savings to give you a cushion.
What would it take to save three months’ of your absolute minimum living expenses? How can you go about raising this money to give yourself peace of mind? Can you cut back on spending in one or two areas? Can you sell something you no longer need? Think long and hard about levers you have to pull to raise enough savings to give you a cushion—a soft place to land. This is going to change your mindset and worry levels considerably, so it’s worth going the whole nine yards and exploring every option.
- Consider a side-hustle for additional cash until you get 3 months of savings in the bag.
If you can save more from your existing salary, can you also side hustle? Babysit? Mow lawns? Work in a call centre after hours? While a second job might be a challenge to your already busy schedule, it may only need to be a short-term gig until you get 3 months of savings in the bag. If you can do longer, great. The more you save, the better off you are. Three months is a fantastic start and should be your first focus.
- Set a date for when you want to achieve this goal. Don’t let it drag on.
Give yourself a deadline and hold yourself accountable. You would be surprised how much more efficient you will be with your thinking and your time if you are working to a live deadline.
There’s an old saying in the sales world: Activity = Action = Results. You need to put in a concerted effort to solve this one for yourself. It is one of the most important steps to go through on your road to financial freedom. So go on, invest in yourself.
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