Do You Have A Resilience Fund?

One of the core tenants of good personal finance is having an emergency fund.  Basically an emergency fund is an account set aside to deal with unexpected expenses.

It’s generally recommended that you keep an emergency fund in a very liquid investment account so the money can be accessed quickly if not instantly.  In short, an emergency fund gives fast access to money when something goes wrong.

But do you have a resilience fund?  What is a resilience fund?

Resilience Fund – A mental fund consisting of knowledge, wisdom, and strength acquired through failure, struggle, and hardship. 

How does one build up a resilience fund? 

Life is difficult, and we all have failures.  The good news is the lessons from those failures and the ability to recover and move on are all deposits into your resilience fund.

But far too many still don’t have enough assets in their resilience fund.  They get comfortable in life and stop making regular deposits.  Most experts recommend having large reserves of knowledge, wisdom, and strength for a solid resilience fund. 

You see, unlike an emergency fund where 4 to 8 months of living expenses saved is probably enough, you can never have enough knowledge, wisdom, and strength saved in your resilience fund.  More is always better.

So how can you go about making your resilience fund bigger?  There are three main kinds of deposits.

Past Deposits – If you’re an adult you’ve likely already made some good deposits in your resilience fund.  Being cut from the baseball team, or failing organic chemistry.  Unrequited crushes and loves lost.  You moved on from these things and grew.  You have a start.

Intentional deposits – This is where most folks fall short.  Because deposits in a resilience fund are almost always an uncomfortable experience, most people do not want to make intentional deposits.

So how can you make intentional deposits?

Do hard stuff – Take on challenges.  Reach out of your zone of comfort.  Apply some intentional stress.  Run a 5k, and run as fast as you can to get your best time.  No, wait, run a half-marathon.

Do even harder stuff that has a high failure rate – Take on bigger challenges that you’re pretty sure you’re going to fail at.  When failure is an almost certain outcome, it changes the whole dynamic of your approach to the task.  You can acquire knowledge and wisdom faster.

Practice intentional discomfort – Go backpacking and sleep in a tent for a few nights in a row.  In the rain, with bugs.  Join toastmasters and sweat it out talking in front of big groups of strangers.  Start that masters degree program you’ve been wanting to do all these years.

These are just a few basic ways you can make intentional deposits into your resilience fund.  At some point during all of these you will be asking yourself:

“Why am I doing this!?”

If you’re asking that question, it’s very likely you’re making an intentional deposit into your resilience fund.  Kudos!

Inevitable Deposits – Life will assuredly throw things at you that will require resilience fund deposits to be made.  These are called inevitable deposits.  We don’t know when they’ll happen, but we know they’ll happen.

The ironic thing about future inevitable deposits is that they tend to require temporary withdrawals from your fund before you can make a deposit.  Mostly because, unlike intentional deposits, they are unexpected and unplanned.

 

My Resilience Fund Strategy

Broker or Company – I store my resilience fund in my brain.  There are no annual fees and my brain has been a trusted partner to work with (mostly).  Most people will do this as well, although journals and diaries can be used with good effect.

Deposits – I try to automate my resilience fund deposits.  It can be difficult, but I strive to constantly put activities in my life that require me to struggle and persevere, both physically and mentally.

By automating deposits as much as possible I keep a level of optimal anxiety that stresses me enough to grow, and prevents me from becoming comfortable and complacent.  It’s a constant balance between too little and too much, and takes practice.

Withdrawals – This is more difficult.  Money in a traditional emergency fund is fungible, when you need it you withdraw it.  It doesn’t matter which dollar comes out first.

Since it contains knowledge and wisdom rather than money, a resilience fund is different.  You have to keep individual pieces of knowledge accessible and ready to use depending on the emergency at hand.

Going through a divorce?  You need to withdraw those lessons learned from previous breakups and emotional trauma.  You are still loved, you learned that before.  So withdraw that lesson from your resilience fund and use it for this new emergency.

Perhaps you broke your leg and are now dealing with months of painful physical therapy to recover.  Thankfully you’ve prepared for this disaster with deposits in your resilience fund!  Remember that first marathon you ran? 

Remember the pain and agony you felt at mile 21?  You still had over five miles to go, you thought you’d never make it.  I’m done…  

But you dug deep.  You went to places with your body and mind that you once thought were impossible.  It was agony for sure, but you finished and look what it did for you!  You can now deploy those lessons from your resilience fund to get through your physical therapy.  You’ve been there, you know how to cope with this pain.  

These are just two examples of resilience fund withdrawal strategies.  Withdrawals could play out in an infinite number of ways.  The good news is, with a well-built fund, it’s likely you’ll figure it out when you need to.  

 

Conclusion

Life will throw bad things at you in the future, I don’t need to have Nostradomic powers to get that prediction right.  Your resilience fund will help you get through most anything life can dish out, but you must keep building it! 

The most common way people fail in their resilience fund strategy is by not making enough intentional deposits.  You can’t let your fund atrophy.  An atrophied fund will fail you when needed. 

But a large and diverse resilience fund will give you the crucial tools you need to deal with anything.

As future crises occur in your life, your resilience fund will help you focus on what you can do about the crisis, not on the negative. 

Your resilience fund will build your confidence to levels you never imagined.  This confidence will be the bedrock that stops anything in life from endlessly plummeting downward. 

Your resilience fund will train you to realize that no matter what happens, you have the mental and physical resources to deal with it.  Your fund will give you tenacity, grit, resolve, and especially courage.  Over time you’ll find it to be your secret weapon.

So financial warriors, get out there and keep building your resilience funds!