Growth & Jobs | Financial resilience more than simply earning money, says banker

With households facing rising costs and crises impacting income and economic stability, Saniah Spencer, chief product officer for savings and deposits at JN Bank, is urging people to prioritise financial resilience to better prepare for the future and withstand unexpected shocks.

Speaking at a recent meeting of the Rotary Club of Trafalgar New Heights, Spencer said building financial resilience requires more than simply earning money. It means developing a financial system that can absorb shocks while creating opportunities for money to grow over time.

“It’s about preparing yourself to be able to react or act when there are unforeseen circumstances,” she said. “Financial resilience is also about preparing for opportunities and asking ourselves how we can make our money work for us. We have to think about diversification, not only with our money but in our personal lives,” she added.

One way of thinking about that system, she explained, is through a three-bucket approach for saving and managing money, with each bucket serving a different purpose.

“If we’re thinking about all our responsibilities and plans at the same time, the pool of funds we have cannot serve every purpose. So, we have to put our money into different buckets,” she reasoned. “A lot of times, the money we have for one purpose, like a business, we mix it up and use it on ourselves for personal business. We have to put the money in buckets. That is what financial resilience is all about.”

Money for now vs money for later and money for growth

Spencer said the first bucket should be “money for now” which should serve for immediate needs and emergencies. She said this is money that should be readily accessible when an unexpected expense arises or income is temporarily lost.

“Banks are encouraging people to separate their savings from their everyday transactions and that’s for financial resilience and to combat fraud. When you have everything in one account and you’re spending away and someone decides ‘I am going to spend for you’, what happens?” she questioned.

The second bucket, she described as “money for later” or funds earmarked for near- and medium-term goals. This could include money set aside for education, major purchases, home repairs, insurance expenses or other planned costs.

The third bucket is “money for growth” or long-term wealth building. This is money intended to work over time through investments or other assets.

“Savings and financial resilience are not just about the return you earn on your money. They are also about having a clear purpose for that money and ensuring that it is working towards your financial goals,” she stressed.

How Fixed Deposits Can Help

Spencer pointed to fixed-deposit arrangements as one option that can help consumers manage money in both the “money for later” and “money for growth” buckets. For funds that are not needed immediately, she said, a fixed deposit can provide a structured way to set money aside for a defined period while earning interest, adding that the approach can also give people greater certainty about when the money will become available.

“If it is that you are putting away “money for later”, then it means that you should assess whether or not you can afford to put away the money on a tenure, maybe 30 days or 90 days, a year, two years, etc, depending on when you’re going to need those funds,” she said.

Using JN Bank’s Premium Offer, which is tied to its fixed deposit savings solutions, as an example, she further explained that a fixed deposit account is useful because it can solve several problems.

“It’s flexible but it’s also a purpose-driven facility and should be aligned to your purpose,” she said. “One major benefit is that you can also use it to get a loan on those funds. So, if it is you have funds set aside for a year and an emergency comes up and you have no money in your first bucket, you can get a term share loan that allows you to keep your funds in that fixed deposit and it continues to earn while you pay back that loan,” she explained.

In reinforcing that “financial resilience is just being deliberate about planning and asking the right questions”, Spencer said cultivating a mindset of purpose-driven saving can help people become more intentional about how they use their money, while better preparing them to manage competing needs and navigate unexpected financial challenges.