Stop Striving For Financial Perfection and Start Striving For Financial Resilience
Here's how.
I recently teamed up with Jannese Torres from “Yo Quiero Dinero” on her podcast discussing financial trauma and I introduced two terms:
Financial Perfection
Financial Resilience
I explain the difference between the two in the following Twitter thread:
However, often times in financial education we talk about what you should and shouldn’t do, why you should or shouldn’t do it, and fall short on explaining HOW to do it. That’s what this article is for.
Financial perfection is often difficult to avoid with the constant attack on our psyches. Through carefully crafted marketing, the barrage of advertising we see across traditional and social forms of media (re: Super Bowl ), and even what we see in our peer groups, the pressure to acquire and demonstrate status via our finances is ever present.
The fact that it’s still a social taboo for us to speak openly and honestly about where we stand financially —lest we have checked off some box regarding income, credit score, or credit limit— compounds this issue.
So what can we do?
As cliché as it sounds “personal finance is personal” and that means you have to develop a firm understanding of who you are and what you want outside of those influences. Of course that can’t be done without a firm understanding of foundational financial literacy. Understanding the “rules” so to speak, put you in a position to navigate the curve balls life may throw at you and allows you to build that muscle of resilience each time something doesn’t go your way.
What are your values? You also have to make sure that your financial goals are aligned to what is truly important to you. Do you support your family, church, or community financially? Could that get in the way of saving, paying down debt, or investing? Certainly.
In sifting through what is important to you via your values you can set realistic and attainable goals without feeling guilty for choosing one over the other. Additionally, you can set boundaries within those values that allows for you to prioritize your financial wellbeing while also supporting who and what you want to support.
I remember some chatter across social media where people were reluctant, and even felt guilty for tapping in to their emergency funds (wait for it…) during an emergency!
This is a prime example of striving for financial perfection. You want the emergency fund because every financial guru tells you that you should have a fully funded emergency fund at all times.
But…
The purpose of the emergency fund is to cover emergencies, so accepting that fact and defining in your mind what counts as an emergency is key to being financially resilient. Taking action to re-fund that emergency fund afterwards should then become the natural next step.
The same would apply to mishaps around credit card utilization, missed bill payments, or a sudden loss in income.
If you can build your financial resilience by insulating yourself strategically to rebound from the curveballs that life throws at you—whether it be in your control or otherwise— financial perfection no longer exists.
Financial Perfection is an Illusion
You ever see the question of the $100k or the 850 credit score? Which one would you choose, and be honest with yourself? The truth is there is no right answer. There was a time I had a 830 credit score so the easy answer would be the $100k. While others might be experiencing food insecurity or a possible eviction and the $100k is the best answer. What I can tell you about that 850 credit score however is that after a point, your credit score doesn’t offer you any greater benefit. The difference between a 730 and 850 credit score isn’t that significant, it at all and you still need some cash and/or income to leverage that score.
In doing so you will also alter that score making your “perfect credit” no longer perfect. Financial perfection, if attainable, is simply a snapshot of a moment in time. Where financial resilience simply will always be as a result of your intentionality.
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Thank you always,
Rahkim