When we think of the words ‘financial resilience,’ it’s easy to default to conventional thinking on the subject, i.e. the importance of building an emergency fund, keeping your debt-to-income ratio low, diversifying your investments, getting the right insurance in place, and sticking to a budget.
These are clearly wise and practical strategies to bed down in an uncertain world — but do they go far enough? And, perhaps more importantly, do these practices alone tell the right story? In this blog post, we want to share how, although these practices can be helpful essentials, they too often prop up the limited and even false narratives of rugged individualism and the nuclear family.
The Power of Story
As London-based author and speaker Pete Hughes suggests, “The story you live in is the story you live out.” Narratives quietly shape our lives, and our finances are no exception; after all, the way we use our resources is an extension of our values and beliefs, which in turn tend to be rooted in the cultural stories and childhood experiences we have inherited.
So, if rugged individualism and the nuclear family fall short of helping us frame financial resilience, what are the alternatives? Well, we would put it to you that because most of life is lived in community — humans are intrinsically social creatures — financial resilience might actually rest more on the strength of your relationships and social support systems than on how stable your finances are, or how much you have saved as an individual.
That’s where the key idea for this blog post comes in: interdependence. When applied to financial resilience, we believe that interdependence can pave a truly sustainable path for our financial future.
Today, we will talk through some of the research on the link between strong relationships and personal well-being, including financial resilience, as we explore how interdependence can offer a more truthful lens than other prevailing narratives in American culture, while also being careful to distinguish it from its toxic counterpart, codependence…
Rugged Individualism or Interdependence? A Bodily Metaphor to Better Understand Financial Resilience
When the human body goes into shock, it does a strange thing: it shuts down bodily functions that aren’t absolutely essential for life. Blood flow to your hands, feet, and limbs is the first thing to go, and the process continues until all that remains are the vital functions of your heart, brain, and lungs. Similar things happen when your body freezes, or when it enters ‘starvation mode’ (when someone goes a long period without food and water).
The common thread here is the idea of shutting down or shutting off that which is not completely necessary — and it happens to be a great analogy for the advice most people offer in relation to financial resilience. Creating an emergency fund, sticking to a strict budget, and getting the right insurance in place are all practices designed to deal with crisis situations, as they claim to focus on basic financial necessities.
The Problem with Individual Thinking
Although these survival responses are natural processes designed to preserve life, they typically come with huge side effects that take a long time to recover from, if at all.
Extreme shock, freezing, and starvation can all result in death without treatment, but even if you recover, you might experience prolonged brain damage and other medical complications in the months, years, and even decades after.
And besides, the point of this bundled metaphor is that it only involves a single body — a body that perhaps isn’t quite as rugged as first thought, when push comes to shove. If we consider the financial parallels, a similar picture emerges: in the worst-case scenario, you could experience bankruptcy, homelessness, insurmountable debt, and many other financial ailments, depending on the severity of the financial shock(s).
And besides, in order to draw the physically shocked/frozen/starving individual out of their problem situation, you likely need other people: people who can provide medical treatment, heat, or food. In a word: community. The question we would ask today is: “Why would it be any different for financial resilience? Why wouldn’t the help we need be found in an interdependent community?”
The Conventional Path to Financial Resilience
Metaphors aside, we want to make it clear that the basic suggestions for financial resilience do offer some value; they just aren’t the be-all and end-all. They provide helpful, if limited solutions for financial resilience in the modern world, especially in the short-term. Here are the key components:
- Building an Emergency Fund: Financial experts recommend setting aside three to six months’ worth of living expenses in a liquid (i.e. accessible) account to cover unexpected costs like medical emergencies or a job loss.
- Stabilizing Your Debt-to-Income Ratio: Keeping your debts manageable ensures you’re not over-extended and can weather financial storms without undue strain. Prioritizing paying off high-interest debt like credit card debt is a great first step if you have a poor ratio at present.
- Diversifying Investments: Developing an investment portfolio and spreading investments across asset classes can help minimize risk and work towards a stable growth trajectory over time.
- Getting the Right Insurance: Health, term life, disability, and home insurance can help to protect against catastrophic events that could decimate your finances.
- Sticking to an Intentional Budget: Budgeting can help you to spend within your means and consciously align your financial behavior with your goals and values.
These five strategies are a good start for building financial resilience — but insofar as they are touted as a complete solution, we believe they fall short, for one simple reason: their narrative bias.
Specifically, the narrative bias of rugged individualism (the idea that each person is responsible for securing their financial future with little reliance on others) and the complementary concept of the nuclear family (a self-contained unit of two parents and their children, where there is an assumption that the small family unit can act as a sufficient safety net for most life events).
But how well do these ideas play out in practice? And how well do they actually serve humanity?
The Limitations of Rugged Individualism and the Nuclear Family
Rugged Individualism: The Illusion of Total Independence
The mythos of rugged individualism (think John Wayne and frontier settlers) celebrates self-sufficiency and independence. While this mindset can foster personal accountability, it can also lead to isolation, power games, and overwhelming stress.
In the quest to “go it alone,” individuals often reject or undervalue community support, leaving themselves vulnerable in ways no emergency fund or insurance policy can fix.
Consider this: even the wealthiest individuals, like Elon Musk or Jeff Bezos, depend on vast networks of people—employees, advisors, and collaborators—to achieve ongoing success.
For those of us with more limited resources, building financial resilience without community could be an even taller order. The idea of total independence ignores the reality that no one thrives in isolation.
The Nuclear Family: A Shrinking Safety Net
The nuclear family, as a model, goes a tiny step further by assuming that the needs of all individuals can be met within a small household unit. However, even this model is becoming increasingly impractical and inadequate for those who want to live life to the full:
- Smaller Family Sizes: Modern families often have fewer children, which limits the support network available within the family structure.
- Geographic Separation: Family members are often spread across different cities or even countries, reducing their ability to provide immediate support.
- Economic Pressures: Rising costs of living mean that even nuclear families may struggle to provide financial support to one another.
Simply put, relying solely on the nuclear family for a sense of financial resilience is not only risky but also ignores the potential upside of investing relational capital in a healthy interconnected community.
Financial Resilience Through Interdependence
If rugged individualism and the nuclear family are incomplete models, what’s the alternative? The answer lies in healthy interdependence, where individuals contribute to and benefit from a supportive community. This approach doesn’t mean relying on others to solve all your problems or sacrificing autonomy—it means building reciprocal relationships that provide mutual support during life’s ups and downs.
What Does Healthy Financial Interdependence Look Like?
Healthy interdependence is about fostering relationships for collective resilience while maintaining boundaries and individual responsibility. Here are a few examples:
- Shared Resources: Community support networks, such as religious organizations, school groups, or neighborhood associations, can provide intangible resources including childcare, transportation, or emergency aid.
- Informal Financial Support: Trusted friends or extended family members can serve as temporary sources of financial support in times of need, provided these arrangements are based on clear communication and trust.
- Collaborative Ventures: Entrepreneurial ventures often succeed on a partnership basis, where individuals pool resources and expertise to achieve shared goals.
Distinguishing Interdependence from Codependence
It’s important to draw a clear line between interdependence and toxic codependence. In healthy interdependence, there’s a contextualized, seasonal balance of giving and receiving support. In toxic codependence, one party disproportionately relies on the other and acts as a drain on their emotional, spiritual, and material resources, creating an unsustainable dynamic.
Example 1:
- Healthy Interdependence: Sharing childcare responsibilities with another family in your community, where both families contribute equally to the arrangement.
- Toxic Codependence: One set of parents constantly drops their kids off at the other family’s house, after which they head out to do their own thing; the allegedly ‘shared’ childcare takes place in mostly one household only.
Example 2:
- Healthy Interdependence: When one friend goes through a hard financial situation, another friend or member of the community steps in to offer a low- or interest-free loan to help them get back on their feet, with clear repayment terms. Or perhaps when someone experiences a sudden job loss, another member of the community offers a temporary job posting in their own organization.
- Toxic Codependence: A friend repeatedly borrowing money without a clear plan for repayment, leaving the other person financially strained. In the meantime, the individual borrowing the money continues in the same behavioral patterns that got them into a financial bind in the first place.
By fostering healthy interdependence, as in the positive examples above, you can build a collective financial safety net that goes beyond individual wealth and taps into the strength of the community.
Relationships: The Ultimate Safety Net for Financial Resilience
Strong relationships aren’t just good for your emotional well-being; we believe they could be essential for financial resilience too. The Harvard Study of Adult Development, one of the longest-running studies on happiness, has shown that the quality of our relationships is the most significant predictor of happiness and life satisfaction. It stands to reason that this principle would extend to financial resilience too: the idea being that the stronger your relationships are, the more secure your overall financial wellbeing is likely to be.
The Link Between Relationships and Financial Resilience
Here’s how healthy relationships could contribute to financial resilience:
- Emotional Support: During financial setbacks, supportive relationships can provide the emotional strength needed to navigate challenges without feeling overwhelmed.
- Practical Assistance: Close-knit communities often step in during emergencies, whether through lending money, sharing resources, or offering a temporary place to stay.
- Opportunities for Growth: Networking within your social circle can lead to career opportunities, business partnerships, or investment prospects that enhance financial stability.
The Danger of Isolation in Financial Independence
In contrast, the pursuit of financial independence at the expense of relationships could lead to loneliness and poorer life outcomes. The Harvard study found that individuals with weaker social connections were more likely to encounter health problems, have shorter life spans, and experience lower levels of happiness.
Financially speaking, isolation could leave individuals without a support system in times of need, increasing the risk of long-term hardship (as in our bodily metaphor earlier).
Building Financial Resilience Through Community
To cultivate financial resilience through community, consider these steps:
- Invest in Relationships: Strengthen your connections with family, friends, and community members. Attend social events, volunteer, and participate in activities that build trust and reciprocity.
- Join Supportive Networks: Look for communities aligned with your values, such as faith-based groups, alumni associations, or neighborhood organizations. These networks can provide emotional and financial support in good times and bad.
- Share Resources Wisely: Explore ways to share resources with others in a fair and mutually beneficial manner. For example, carpooling or sharing household tools could reduce costs for everyone involved.
- Maintain Healthy Boundaries: Ensure that financial interdependence doesn’t turn into toxic codependence by setting clear expectations and boundaries in all financial arrangements. It could be healthy to have written contracts with friends in such circumstances, for mutual accountability.
A Holistic Approach to Financial Resilience
While conventional financial advice—such as building an emergency fund or diversifying your investments—remains valuable, we’ve argued here that it could be only part of the equation. Instead, true financial resilience, as we see it, is built on a foundation of strong relationships and healthy interdependence. By fostering connections with others, you can create a safety net that goes beyond what any one individual or nuclear family can achieve on their own.
Final Thoughts
The twin narratives of rugged individualism and the nuclear family have shaped much of America’s thinking about financial resilience, but we think it’s time to expand the conversation.
By embracing the power of community and healthy interdependence, we could create a more inclusive and effective model of financial resilience. Whether that’s through shared resources, emotional support, or collaborative ventures, building stronger relationships could be the key to navigating life’s financial uncertainties with confidence and purpose.
And if that’s something you’d like help with from a professional perspective — someone who can help you get your finances on track — then why not reach out to Iron Point Financial today to start a conversation about the ways you develop greater financial resilience in your life?
At the end of the day, financial resilience isn’t just about the numbers in your bank account—it’s about the people who stand by you, the values that guide you, and the legacy you leave behind.
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Iron Point Financial is here to empower you to secure a brighter tomorrow. We operate physical offices in Grove City, PA and Greenville, PA.
We primarily serve residents of Pennsylvania, Ohio, West Virginia and Florida but we also have registered broker licenses for 22 other states across the continental USA.
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Disclosures
- A diversified portfolio does not assure a profit or protect against loss in a declining market.
