If the events of the past few years are anything to go by, one thing we cannot overemphasize is that life as we know it is very unpredictable. With the pandemic, political instability in many nations and a full blown out war between two countries, it’s hard to imagine that you haven’t experienced some kind of downtime or recession already. In this article we will learn CAN YOU SURVIVE A FINANCIAL CRISIS ?
This probably has you thinking: Would it ever stop ? When will it all be over ? The better questions to ask yourself are “Can I survive if it doesn’t get better?” “Can I stay afloat with my current finances?”
Well if you’ve pondered this and come up short, today’s video is for you as we discuss ways to survive financial crises.
Without wasting any more time, let’s get to it! If you don’t feel like reading the article here’s the video version: Welcome to Alux. If you don’t feel like reading the article here’s the video version:
The first thing you need to do is to come up with a budget.
You need to know how much money is coming in and how much is going out. Make a list of your income and compare that to how much you spend in a month.
- Where are you financially ?
- What is your net worth?
- What is your financial position if you clear all your debts ?
These are things you should know.
That’s why it’s important to draw up a budget to help you adequately plan based on how you spend based on how much you get.
This way you can easily tell what needs to be corrected — your spending, how much income you make or even the decisions you make.
Creating a budget is your first step towards surviving a financial crisis.
With your budget ready, you can now limit your expenses. Yes, reduce how much you spend by eliminating things that are not necessary.
You might think it’s not necessary, but during a financial crisis knowing how to cut down costs goes a long way in saving you lots of money.
Those takeouts, expensive dinners, avoidable trips are things you could try to spend less money on.
Limiting your expenses helps to closely manage your bills.
Are you wondering how ?
It’s easy. Studying your income and expenses, makes it so you spend a lot of time organizing your money flow.
This means that you will tend to pay bills on time, rather than having to pay extra costs on making late payments.
A method to make this easier would simply be to automate your finances!
This simply means that you’re scheduling all your payments electronically, which shouldn’t be a problem because the world is now fully digitalized.
Automating your payments makes it almost impossible for you to miss payments as the system literally just runs its course. All you have to do is program it.
If you want to survive a financial crisis, then you need to have an emergency fund!
It really doesn’t matter how little or how much you earn, you definitely want to have something saved up for situations like this.
- Let’s take for example some sort of financial crisis hits, your immediate go-to has to be the money you have.
- If you don’t have any money saved, then there’s nowhere to survive from. Hence the importance of the emergency fund.
- The most common advice is to save up money amounting to at least 6 months of your income.
- But with the unpredictability of things you might want to make it a year or even more.
- Just do what feels comfortable as long as you’re making a conscious effort to increase the fund.
Emergency funds make it so that you don’t have to resort to credit cards or even taking loans that will definitely come with higher interest! So If you don’t already have an emergency fund, now is a good time to start one.
Don’t just start, keep building it.
You know what they say, “the more, the merrier” One thing you really need is to have a steady income flow. This is only possible if you have some form of job security.
If you think your employment status might be affected during some sort of crisis, then you want to start thinking of finding new ways to earn.
Nobody can guarantee that their job is 100% bulletproof. Even essential service workers get cut sometimes.
It is important that you find a way to earn, even if it’s on your own terms. A means to make yourself financially secure. If there’s one thing we can learn from the pandemic, it’s that there are several ways to make money.
You can either leverage on the skills you already have, upskill or even learn new skills that are in demand! This will help you stay afloat in a world that is constantly changing.
So now more than ever, you need to diversify your income. Find a side gig that works for you! This way, you stay secure even in times of uncertainty.
Monetize your hobby. Look for possibilities to earn with every opportunity. Try not to set limits to yourself.
- Once you have a steady income stream, the next thing you need to do is to invest.
- Investments help you make income passively. That way you’re making money without even being there.
- Take some of that money you make and put it into profitable businesses.
- Do not invest based on sentiment, that would most likely lead to loss.
Conduct some research, do your homework and make investments in businesses that will bring more income to you.
Also importantly, you don’t want to start worrying or fidgeting during recessions if you’ve made investments. Avoid knee jerk reactions that cause you to instantly make emotional decisions about your investments.
- Try to ride out some of these murky moments and hope for upswings as cruises are only part of life.
- Reach out to a trusted financial aid before you make decisions or changes concerning your investments.
- It’s practically impossible to save for any emergency fund or to even invest if you find yourself in constant debt.
- If you want to survive during a financial crisis, you definitely don’t want to have people hounding you for money you owe them.
Make sure you commit to paying off your debts, especially those that attract high interest rates.
Yes, for some people it’s almost impossible to live without debt – still it’s important that you make evaluations of the debts, and make efforts to pay them so you can unburden yourself as much as possible.
It may seem like a daunting task, but it’s very straightforward.
All you have to do is divert some of the extra money you earn towards paying off your debts.
Credit card debts are the ones you want to really look into paying as having good credit cannot be overemphasized.
That is most times a last resort for people, so you don’t want to have an insurmountable credit debt.
You could also look into getting a better credit card deal. Something that charges at a lower rate.
With this, you can pay less interest, and this can help you pay off your debts faster or even give you some breathing room with how much you spend.
Whilst trying to organize your finances and set yourself straight, it is important that you do not neglect routine maintenance.
Keeping your house, your cars, and even your health in great condition help you save a lot on expenses.
Imagine having to spend on fixing termites invasions or spending lots of money treating type 2 diabetes due to a junk-food diet.
Preventive measures are always a good place to start. Hence why it would be wise to keep on top of your routine maintenance stuff.
You might think that you don’t have the time or the resources to take care of them right way, but —
You should remember that they would probably cause bigger problems in the future, so you might as well deal with them now.
Insurance is an important part of surviving loss. It is therefore important that you have good insurance.
The power of excellent insurance cannot be underestimated, but it is also important to shop aorund for lower insurance rates.
It doesn’t help if you’re carrying around too much insurance or if you could be getting the insurance you have for a better price.
These are changes that can affect your monthly expenses and help to reduce those costs.
In regard to your current policies – and the ones you intend to purchase – it’s very important you have the insurance coverage you really need, and not just the bare minimum.
Educating yourself is an investment that will do you a world of good.
And especially if you have investments, constantly keeping up-to-date on financial trends will help you make more informed decisions as to what to do with your finances.
So read books, study reports, do research, basically delve into anything you can to improve your financial literacy.
- Consider taking online courses as there are so many of those at your disposal today.
- Everything you need to learn is just out there waiting for you to tap into it.
- Finally, you can’t go through life by yourself and when we go through those happy moments, we often want to share it with others.
- It should be the same when we’re struggling or going through those trying moments.
- It is important to inform family and loved ones.
- Going through situations like this without help doesn’t make you strong.
- It just reduces the amount of valid input you could get towards getting better or more productive.
- So speak to someone today. Your parents, your partner, your friends or even a professional.
- You just don’t know where – and in what form – help might come, it’s important that you try to keep your options open.
What. A. Ride!
Remember that if you want legit financial advice tailored to YOUR specific needs, you should definitely talk to a professional as these are just tips to help you along.
- You stuck with us till this point ? Here’s a bonus – you’ve earned it!
- Acknowledge that crises are bound to happen, and that doesn’t mean it’s the end of the world.
- Yes, it’s inevitable that these things happen.
- The most important thing is how we minimize damage and how we recover after that.
- So, instead of trying to predict what might cause a financial crisis, focus instead on how to protect yourself if it ever happens.
- Nobody saw the pandemic in 2020 happening, but it happened regardless.
Life is unpredictable.
So, direct your energy and focus toward preparing against and recovering after such crises. You’ll be glad you did. Do you have more tips for us on how to survive financial crises? Let us know in the comments section.
