Protecting Your Finances From The Current Economic Downturn
There’s always some news of doom and gloom in the economy, and for many, the current conditions will send chills down the spine of those who fail to save. The goal is to achieve financial freedom in life, this to protect oneself from unforeseen circumstances.
No news is good news. If there’s any major news that breaks, it’s usually bad. Once you hear anything regarding the plunging economy, what you first think of is the safe welfare of you and your family. You wonder if you have enough cash saved if disaster strikes.
All the media does is show excerpts, snippets of context, this when they report about the constant roller coaster nature of the stock market, inflation, supply and demand, or the poor unemployment rate.
These are all macro economic crisis which takes a measurement of the economy, the temperature of a certain broad geographic area, one that you have no control over.
Your Personal Financial Economy
What you can control is your own household economy. This definition of economics is the financial management of your family or business, something that you have complete administration over.
It can become an efficient art and a science when it comes to managing a household. A logical reasoning for effectively functioning of one’s capital reserves, this especially when it involves money.
What you’re responsible for is sheltering yourself as financially well as possible, to protect yourself from the ravages and the fluctuations of the world economic conditions, especially if it’s on a slippery slide downwards.
Spend Less Than You Earn
This is the biggest lesson that you can learn from your grandparents, where debt rarely existed. They earned very little, but lived well and within their means.
They kept expenses minimal, adapting to survive within their paycheck after taxes. The greasy road when it comes to financial disaster is spending more than you earn, as the burden of debt raises its ugly head.
It’s entirely possible to maintain the standard of your current life while cutting out optional spending. This can be easy as watching a movie with popcorn at home, instead of going out to the theater. Frying up a steak on the BBQ rather than dining out.
Always Pay Cash
Once you purchase something by using a credit card, and you’re not able to pay it off once the statement arrives, all you’re doing is committing your future earnings to the credit card company.
Those future earnings that’s needed to pay your routine household expenses, so what you end up in is economic slavery known as the credit trap. The exception is purchasing real estate which increases in value, such as buying a home which appreciates over time.
When paying cash for larger items, try negotiating a cash discount. Once the economy begins to falter and credit becomes harder to get, cash becomes king. Also, find ways to buy wholesale or in bulk instead of retail, this to lower your costs further.
Save The Money Before You Spend It
If there’s capital goods that you want to purchase or need in the near future, then start saving small amounts in a savings account, this towards that purchase. Continue until you have the cash to pay for it.
If you have 8 years before your child enters college, then estimate what the tuition might be at that time, and then calculate how much you’ll need to save every month, so you’ll have the funds the year they graduate from high school.
Save For A Rainy Day
Constantly be stashing away cash for unexpected emergencies, inflating living expenses, or that well deserved vacation. There’s nothing that causes more insomnia than debt. So forget the sleeping pills, sleep better at night with the peace of financial freedom.
You will need to tuck away some additional cash for sudden personal emergencies such as that leaky roof or getting the car fixed, that dreadful meeting with the dentist, or losing a job.
Once you have a cash cushion that you can access, then magically, you’ll stop worrying about money, as your attention focuses back to living an enjoyable life, while money from unforeseen sources will suddenly appear.
The one thing that most fear during an economic crisis is not having enough money in their savings account, that they can willingly withdraw from during emergencies.
The Advantages Of Saving
What most don’t realize is that there were more individuals who became millionaires on a per capita basis, during the Great Depression in the early 1900’s than any other era in modern history.
This was a time when the economy plummeted and panic set in. The stock market crashed, inflation shot through the roof, the unemployment rate went sky high as businesses went bankrupt. Most lost their jobs and their homes.
It was those who had saved and had cash reserves who were then able to buy these houses, properties, and entire companies for pennies on the dollar.
They ended up becoming millionaires because they prepared for the economic storm called the Depression, and they knew it wouldn’t last forever.
Cash Remains King
Every dollar that comes in the door, start with immediately saving 10% of it, this by putting it into a savings account that you’ll label your cash cushion.
Even if you need to work an extra job or cut down on entertainment expenses, it’s mandatory that you start this today. As time passes, it will become a habit, as you’ll rest better on your mattress full of money.
You’ll live your life with more confidence, knowing that you’ve achieved one of the biggest hurdles in life, which is financial freedom, while protecting yourself from the big bad wolf that is the economic crisis.