There’s a storm coming and it’s about to get tough!
How prepared are you for when the economy takes a downward swing?
If this worries you, you can put those fears aside because there are actually many everyday habits that you can start doing to ease the sting of a recession but it ultimately comes down to two things:
- Reducing your debt
- Increasing your savings
1. Job Security
It all starts with having a stable job and making it a priority to make sure that you maintain job security. Now you may be thinking, “That’s impossible” but it really isn’t.
Look at this way. Let’s say that there are 50 people working for a company. Almost all of those people go to work in the morning, do their job and then go back home forgetting about the company until the following day.
If that company runs into troubles and has to start laying people off, they will do so only keeping the most valuable employee’s. You need to become one of these and you can do so by not being ‘comfortable‘. Don’t think that you are irreplaceable.
You need to make sure that you are always up-to-date with the latest advances in the industry. Keeping yourself educated and then learning these technologies will make you an asset to your employer. When (not if) a financial crisis happens, you’re less likely to lose your job. No employer wants to see their best employee go to work for someone else.
2. Get Out of Debt
Anybody that is in debt now will have a really hard time during a financial crisis. Things may be quiet right now but when the storm comes, so will the collectors wanting their money and interest rates will spike.
If you are in any kind of debt, no matter how scary it can be to face, it needs dealing with.
Take an afternoon to sit down and work out what debts you have. Be honest with yourself. Are you building more debt that you just can’t afford, especially when interest rates increase?
List your debts and order them in terms of priority. You want to try and tackle those debts that have the biggest interest rates first.
3. Emergency Fund
An emergency fund is intended for use when the unexpected happens losing your job. This fund will also help to keep you out of debt if done correctly.
Only you can decide how much you can put aside as everyone’s incomings and outgoings are different but in my opinion you should do what works for you. Anything is better than nothing so don’t worry about starting small. It will soon build up.
4. Create a Budget
This is a simple, yet often overlooked tip. It is common sense that if you create a budget, you can keep track of your income and expenditure easily.
Start off by making a list of everything that you are spending money on each month. This should include all the essentials such as loans, rent and all bills. Now list all of the unnecessary expenditures, which is where you should look to save money. Again, be honest with yourself. Go through the second list and see what you can cut out and in turn, save money. This could be subscriptions for magazines you never even read or memberships you don’t use.
The money you save should then either be used towards your debts or placed into your emergency fund discussed in the last tip.
5. Have a Side-Hustle
There is a good reason as to why so many people recommend side-hustles: they’re important.
First off, it is an extra income stream that can help you to reach your goals faster but also, should you happen to lose your main income source, you will have something to fall back on.
The easiest and most effective side-hustle would be one that uses the skills that you already have or one that expands on those skills. To start with, you could join Freelancer or Fiverr and offer your services as a tutor in your field.
Also check out our post here for ways of making a little extra cash.
The most important thing that you can do is to remember that YOUR economy is up to YOU. Get your finances in order and even when the storm comes, you won’t feel a thing. By having a plan, spending less than you’re making and saving money, you can’t lose! Take care of your personal money situation, and everything else will take care of itself