Understanding What You Can Control In Any Economic Situation

manage your economicsLife comes down to the choices you make, this whether on the type of work you do, the business you want to build, or the personal life you want to lead. What’s often overlooked is the connection that all these economic forces have with each other.

The fact being that interdisciplinary thinking can go a long way. This might sound a tad obtuse to some, but realize that the most important life decisions can be made a lot easier and more accurate, this by thinking more basic, and within one’s capacity.

All that any business comes down to is creating some sort of value. Our personal lives are all about maximizing our utility, where the utility is measuring our happiness or satisfaction that’s gained or realized from being self sufficient.

Protecting Yourself In Economic Crisis
Once the media claims that the economy is failing, most become frantic. Worried how they can sustain their current standard of living, or realize financial freedom because of the upcoming financial crisis.

What needs to be first understood is what the word economics mean, this in terms of thinking about your situation, and how you can benefit from it’s true definition, and then steer it to your financial advantage.

The Macro Economy
Ignore what the media says about the economy, that the stock market is in a roller coaster frenzy, that there’s too much demand and not enough supply, rapid inflation, spiraling mortgage defaults, and the ever increasing unemployment rate.

These are economic conditions out of your control. All you can control is the economics in your household. Economics is the art of managing an entity to remain sustainable. In your personal life, that’s something you can control.

All you can do is manage your household, especially when it comes to money. Making sure that the economics of it are strong and positive.

Spend Less Than More
Our grandparents who didn’t earn very much, were conditioned to keep their spending below what they earned. It’s been proven that the quickest way to financial disaster is spending more than you take in.

It’s entirely possible to maintain your current standard of living while cutting down on spending. This can be done by watching a movie at home rather than going to the theater. Buying a used car instead of a brand new one.

Pay Cash For Everything
Every time you use your credit card, and you’re not able to pay it off once the statement arrives, what you’re doing is just committing your future earnings to the credit card company.

These are the future earnings which should be going to your regular household expenses, or that well deserved vacation, but what you’re becoming instead is a slave to debt.

The only credit that you should be realizing is purchasing property which increases in value such a as house, or for a car since most can’t pay cash for one.

When paying cash, especially for larger items, try negotiating a cash discount. Once the economy goes into a tailspin and credit becomes difficult to get, this is when cash comes king.

Saving For Your Future
Begin by writing down your financial goals. Ask the reason why you need to do so, such as a down payment for your first home, to save for retirement, to pay for post secondary education for your kids.

Give each financial goal a dollar amount along with a time frame. In order to effectively save, you need to know what you’re saving for. You need to have a valid reason why you’re putting your money aside.

Make sure that you create a separate savings account. Realize that just leaving it in the checking account simply doesn’t work, as you’ll find a way to spend it somehow.

Make sure that you can easily make deposits into the savings account, or easily transfer money into it. Most banks can set up automatic deposits on a monthly basis. This is the easiest most convenient way, and treat it like another monthly expense.

Watch The Money Grow
Over time, what you’ll see is your money beginning to accumulate, which is rewarding and motivating. Most will want to save even more. Saving and investing can become a habit in a positive way.

What you need is a concise budget that’s written down. You need to track exactly where your incoming money is going out, this in order to make adjustments on how you spend.

A budget tells you how to manage your money, help you to delegate. All budgeting needs is discipline, while not needing you to sacrifice your current lifestyle. It’s just a plan to get where you’re financially going.

Eliminate All Your Debt
If you have debt, focus on saving to eliminate that debt first, while also putting a small amount aside for unforeseen emergencies. The majority of it needs to reduce your debt.

The reason why you should do this is simple. Why pay 20% percent interest on credit card debt, when all your savings does is earns you 2% to 5% percent interest. So wipe out anything you owe first, before you begin saving and investing.

The Habit Of Saving
After a while, what you’ll begin to do is contribute towards your savings, this by putting all excess money that you generate into your savings account.

This could be bonuses, raises, inheritances, and any other found money that can go towards saving. There’s no need to compromise your lifestyle, as it’s money that’s unexpected.

There’s no secret to saving money. All you need is to just start doing it. What’s often the most difficult is having the discipline to start. But once you see your finances gain momentum, you’ll become hooked on saving for your future.

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