How to Stay Afloat During Challenging Economic Times
We live in a COVID-19 world where a global economic downturn may hit unexpectedly. In this article, I will provide you with some helpful tips on how to keep your savings intact in a time of crisis.
How to Survive During Economic Downturn
No matter how much we want our life to be a bed of roses, that isn’t reality. Even when things appear to be going remarkably well financially, there’s always a possibility of unexpected downturns.
The downturns may result from macroeconomic shocks and be industry-, location- or even business-specific. Whatever the case may be, business growth slows, jobs are cut, unemployment rises, and loss of income occurs.
Here, we’ll present some practical ideas on how to cope with all the above challenges. These ideas are rooted in sound financial principles that you may already know. Accordingly, it’s helpful to familiarize yourself with the tips as they could offer you actionable insights.
Before we get down to some helpful tips, you may want to pick one of the best financial adviors in Texas for more expert help on your finances.
Cut Down on Unnecessary (Non-Essential) Expenses
This is one of the most fundamental pearls of wisdom to apply during economic downturns. The logic behind it is simple: if you are not earning as much as you used to, then you should spend less.
The most practical way of applying this principle is to reduce and even eliminate expenses that are not crucial to your daily life. Some of such non-essential expenditures are listed below:
- Eating out in restaurants and bars
- Taking expensive vacations
- Taking taxi trips
- Subscribing to clubs with paid membership plans
- Subscribing to newspapers, magazines, streaming services, etc.
A simple and practical rule is to ask yourself whether you can stop spending money on things you can do without and still live a normal life. The idea behind is to focus on the necessities, i.e., needs vs. wants. You’ll be amazed at how much you’ll be able to save by avoiding these unnecessary things.
Explore and Pursue Other Sources of Income
During economic growth, you may have a number of fairly stable income sources. Whether that’s a job or business, the stability that comes from this may induce self-complacency. But when difficult times kick in, things change very quickly, and you have to act accordingly.
As the wise saying goes, “When the going gets tough, the tough get going.” If you feel your finances are not in great shape due to the financial downturn, you should get out of your comfort zone. One way of doing that is to explore other opportunities for making money.
The key is to identify your existing strengths and understand how you can make the most of them.
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Selling unused items such as clothes, shoes, jewelry, electronics, etc., can also help you earn extra cash. There are online retail marketplaces where you can sell them quickly and hassle-free.
Find Money-Saving Opportunities
This is similar to cutting unnecessary spendings. However, the focus here is on finding ways to do more with less. That means trying to make your money last longer by:
- Purchasing necessary food items (with longer shelf life) in large amounts.
- Taking advantage of coupons or any form of discounts.
- Using public transportation or carpooling.
- Living in a dorm or sharing an apartment with close friends.
- Consolidating your insurance policies.
- Cut down on TV subscription. Here is how to Watch TV for free
Tap into Accrued Savings and Investments
To survive in a time of crisis, you may have to sacrifice your savings or investments. However, you should only resort to this when you are out of other options.
For example, you own a house which you rent out to supplement your monthly income. Selling it to cover the medical costs of treating a life-threatening disease will be considered perfectly justifiable.
The scenarios and circumstances may differ from person to person. Some people may not even have any investments or savings. However, if you do, making use of them could be your only way of staying afloat during harsh economic times.
Depending on your specific situation, know-how, and resources, some of the above ideas may be more practical for you, whereas others may not. That said, each of them can certainly help you keep your head above water until the situation improves.
Lastly, it’s important to mention that the economic boom and bust cycles are part of life. So, it’s wise to be prepared for any possible downturns before they occur.