Finances For Hard Times
The ups and downs of world finances are really not something I’ve ever really known. I’m too young to remember a recession, and not worldly enough to have seen the effects of recent years on Greece and Portugal and even the United States. So with the flux of economies, I thought I’d do a bit of research on how best to ride out the storms as well as the sunny days.
Watch Cash Flow
Experts seem to suggest that continuing to save, even through financial down periods, is essential. Even if you have to take your foot slightly off the saving-pedal somewhat, keeping a savings routine in hard times and the good will make a huge difference to your finances over the years. Once your saving is accounted for, have a look at your cash flow. In good times, you might be looking at how best to accumulate assets but in tighter times, it’s a chance to downgrade all your expenses and get things back to basics. There will be another boom period, for now you just need to consolidate what you have and make sure you are across your routine savings and all your necessary expenses.
More Than A Head Above Water
So many of us live from paycheck to paycheck, with no financial fat to bolster us through our days. Living that close to the edge however, can be a big deal should the financial winds turn. If you’re exposed should the interest rate rise or your hours get cut at work, think about ways in which you could lower your exposure. An emergency fund to get you through a couple of tough months is an excellent way to ride out the bumps of national or global economies, paying down your debt likewise. The less you are exposed and the more flexible you can be financially will mean you navigate the changing tides with greater freedom. Linda Stern at Reuters suggests even thinking about ways to diversify your income, maybe getting skilled-up in good times so you have a greater swag of tricks when downturns happen.
Stock Up
People suggest the financial apocalypse is here at least once a week, and I have yet to read or see of one. That said, it can never hurt to remove some of your dependencies on fluctuating rates- why not think about setting up a vegetable garden in wake of the every-increasing costs of fruit and veg, or investing in technologies that would allow you to be off the grid to protect yourself from increasing electricity costs. According to Stern, companies that produce essentials- say like toilet paper- post 20% plus returns during recessions. If you’re seriously concerned, get in early and stop them rising off the backs of people in need.
Spend Less Than You Earn
Things can never go so badly wrong should you live by this maxim. Spend less than you earn, continue to save throughout good times and bad. Prepare yourself for some goals taking a little while longer to achieve, as rushing them will get you nowhere. Buying a house might need a couple of years extra saving. A small business might take longer to get profitable. We are like balls on a river. It goes up. It goes down. To resist will only make us seasick.
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