Surprisingly few people are ?financially fit? and simply jogging to and from the bank won?t make you so!

 

There are a few fundamentals that all financially fit people understand and apply in their lives and the most significant is to understand their Financial Resilience Index.

 

This is a key financial indicator that you should have in mind whenever considering any major financial decision especially when considering a career change or retirement or if it looks like you might lose your job any time soon.

 

Stated simply, your FRI is the period of time you (and your family) can survive if all revenue stopped today and is broadly calculated as: Cash reserves divided by total monthly cash outgoings.

 

If your total cash is say $30,000 and your total monthly cash expenses are $6,000,

your FRI is 5.0 (30,000 divided by 6,000).

 

In Singapore, on average, this is an alarmingly low 3.0!

 

Many Singaporeans are asset-rich and cash-poor, and it is this low FRI level that is a far better indicator of whether you might be in trouble if your income stops suddenly through retrenchment, retirement, incapacity or whatever.

 

Covid exposed this BIG TIME!

 

Harsh realities

• #1 ? we can no longer rely on others to provide for us when we lose our jobs
• #2 ? we can no longer rely on others to provide funding for our retirement
• #3 ? turbulence, uncertainty and wild surprises are now the norm

 

Upon retrenchment, it takes a middle-income earner (approx S$5,000 per month in Singapore) an average of 4 months to get a new source of income and even longer to liquidate a major asset (e.g. property). Higher earners might take much longer. That would put the average Singaporean 1 month in the red (4 or more minus 3)

 

Sometimes the new position is at a much lower pay and the situation gets worse still.

 

Therefore if anyone has a FRI is 4.0 or less, you are clearly in the Danger Zone.

 

However, as with a serious disease, early detection can avoid a worst-case scenario.

 

 

Avoiding the Danger Zone

We encourage our clients to accept that they are responsible for their own destiny and are working towards career freedom.

 

But what about finances?

 

The first step in any kind of self-management is awareness of where you are now. Do you know your FRI?

 

Take the easy one first:

How much cash you really have? What should be included?

 

Then the tougher part:

Do you really know what are your total monthly cash expenses?

If you list them, how would you know if you?re missing some?

Maybe your haircuts, that occasional round of golf, a visit to the spa? What about the infrequent items like insurance premiums or vacations?

 

Be thorough and above all, be honest.

 

There are many bits and pieces that really add up over time and each one we overlook distorts our true FRI and reduces our financially fitness.

 

Once you know your FRI, the next step is to review where changes can be made to either increase cash or reduce expenses, should it become necessary.

 

If your income truly stopped today, this would become imperative ? so why wait till then?

 

 

This is just one area of financial fitness ? but crucial in order to avoid nasty shocks!

 

 

Do not delay!

Compute your FRI today!

Then take action to improve it!

 

We can help ? contact us for advice, coaching and options

 

So if you are planning to offer an MLM opportunity to these people, you can and should use these examples to show them how the extra income from an MLM business can be a really valuable insurance against sudden downturns.

 

Turn a FRI-day into a FRI-yay!