What does financial resilience mean?

Financial resilience refers to the capability of an individual or household to withstand and recover from financial shocks or unexpected events. This could include job loss, medical emergencies, or any unforeseen expense that might destabilize one's financial situation. Having financial resilience often means that a person has established a solid financial foundation, which may involve savings, investments, and a well-thought-out budget that allows them to navigate through tough times without falling into long-term financial distress.

This concept emphasizes the importance of preparedness and adaptability in financial planning, indicating that relying solely on a high income or effective savings strategies is not enough. Building financial resilience is about creating an overall strategy that enables individuals to respond to challenges proactively and manage their financial lives effectively during hardships.