Exercise ‘Financial Resilience’
“All financial plans are subject to fate and fortune,” said Roth. “You lose your job. Your spouse gets sick. Your house burns down. While it’s not possible to plan for specific unexpected events, it’s certainly possible to prepare for problems in general.
“From my experience, the best way to do this is to exercise what I call financial resilience,” he said. “Financial resilience is the ability to cope with the unexpected without panic — kind of like how a tree bends in a windstorm without breaking. A variety of factors contribute to financial resilience. The greater the gap between your earning and spending, for instance, the less damaging sudden job loss is to your situation. The more you have in emergency savings, the less panic you feel when your car is totaled in the Walmart parking lot. The more diversified your investments, the less you care about stock market swings.”