Reasonable debt is an effective approach for households to smooth intertemporal consumption and maximize household utility. However, the rapid growth of household debt in China in recent years has severely undermined household financial sustainability and threatened systemic financial stability. In particular, compared with urban households, rural households face more unstable income due to their relatively single income sources and frequent shocks from natural disasters. Moreover, financial exclusion targeting agriculture, rural areas, and farmers further exacerbates liquidity constraints for rural households. As a result, the proportion of financially vulnerable rural households has not only shown an upward trend but also been significantly higher than that of urban households (Xu Jia et al., 2022). The Fourth Plenary Session of the 20th Central Committee of the Communist Party of China proposed to coordinate development and security and continue to write a new chapter featuring the “two miracles” of rapid economic growth and long-term social stability. Against this backdrop, how to reduce the financial vulnerability of rural households and enhance their financial resilience has become an important issue that must be highly prioritized and addressed. Using data from the China Household Finance Survey and from the perspective of off-farm employment among rural laborers, this study draws on the methods of Ampudia et al. (2016) and adopts the framework of Zhang Zhengping and Chen Yang (2023) to measure household financial vulnerability from two dimensions: “income failing to cover expenditure” and “assets insufficient to cover liabilities.” Based on this, it examines the effects and mechanisms of off-farm employment on the financial vulnerability of rural households. Empirical findings reveal that off-farm employment expands social networks, enhances income stability, and improves financial accessibility, significantly reducing the likelihood of financial vulnerability in rural households. This effect primarily stems from improvements in rural household cash flow. However, the mitigating effect of off-farm employment on rural household financial vulnerability exhibits clear asymmetry, being more pronounced in alleviating financial vulnerability among the new generation, those employed in the tertiary sector, and rural residents with a college degree or above. Dynamic effect tests show that the mitigating effect of off-farm employment on rural household financial vulnerability intensifies over time. Compared with existing research, this study extends the literature in the following two aspects. First, it dissects the “black box” of how off-farm employment affects rural household financial vulnerability. It systematically identifies the mechanisms, asymmetric effects, and moderating effects through which off-farm employment influences rural household financial vulnerability from the three perspectives of social networks, income stability, and financial accessibility, thereby helping to enhance the precision of policy design. Second, this paper assesses both the static effects and the dynamic trends of off-farm employment on rural household financial vulnerability. Unlike most existing studies that remain at the static analysis level, this paper further examines the dynamic evolution of the mitigating effect of off-farm employment. This enables the government and the public to comprehensively understand the positive role of off-farm employment in alleviating rural household financial vulnerability from a long-term perspective. Financial risk is currently a key area of concern in China’s risk prevention efforts. The findings of this study provide empirical evidence for government departments to construct and improve policy systems for preventing rural financial risks from the perspective of off-farm employment among rural laborers. This contributes to better balancing development and security and achieving a positive interaction between high-quality development and high-level security.