While I’m experiencing a second delay at the airport, I’ll pass along this guest post from Anthony Alexander. He is a freelance writer who enjoys sharing his financial experiences with others. In these rough economic times Alexander feels it is important to share all the tips and advice possible to help others.
Tough times in the economy usually equate to tough times for individuals and families who are trying to get by on limited funds, a low level of job security, and a rising cost of living. There are some great strategies you can implement if you are trying to survive in this tricky situation and here are 5 tips to help:
Don’t Buy What You Can’t Afford
It may sound like an incredibly obvious statement but ‘don’t buy what you can’t afford’ is actually one of the most important rules to stick to during financial uncertainty. We have all gotten used to being able to finance and borrow for items which are outside of our current means, but in the midst of a tough economy this is a very bad idea. Your credit card is not your friend and can land you in a lot of trouble if the card limit exceeds your monthly spare income level.
Only Buy if You Can Afford to Pay in Cash
It is all too tempting to take out a loan to pay for a new car or get a mortgage for a new property, but if the economy takes another downturn you could end up paying the bank back more than your house is actually worth. As a general rule, if you can’t afford to make a purchase with cash, it is likely that you cannot afford it full stop. If we have learnt one thing from the last recession it is that spending more than you are earning and hoping that you will be able to keep up with repayments is a really bad idea. Just because finance options may be available it doesn’t mean they are a good idea.
Get into a Long Term Mindset
If the current economic situation is improving month on month, do not assume that this is the end of hard times. Things can change quickly in today’s global economy so it is best to be prepared for change. What does this really mean? If you are currently earning more than you are spending, instead of splashing out on new things which you can do without, plan for the future and put aside as much as possible each month. A good portfolio will help to ensure that you have enough savings during harsh times. Using an investment company like Fisher Investments overview is a great way to start.
Creating a Budget to Keep Spending Under Control
Creating a sensible and realistic budget will ensure that you know exactly what money is coming in, what your overheads are, and what spare cash you may have each month. It is extremely important to stick to your budget and not to overspend as this is where problems begin to occur. It takes a lot of self discipline but if you can manage to overcome your spending urges you will be in a much stronger financial position. One of the most surprising things you will notice is how much you can save by making little changes such as taking lunch to work, getting rid of the extras on your mobile bill, and disconnecting your landline if you don’t use it regularly.
A tough economy makes life difficult for everyone but if you secure your own financial security by following the tips above you can ensure that you do not end up in a mountain of debt that you are unable to pay off. Sensible spending and saving is the key to your own financial stability and you are in control of this.
Yeah, if the economy takes a real turn for the worse you should only buy the bare essentials and save the rest for a rainy day. If you are still living way above your means in a down economy and you then lose your job, it could end up being your own perfect personal financial storm.
It is amazing how many people get caught up with spending above their means. This is the main reason why so many people are in financial trouble and have built up a mountain of credit card debt. Only using cash to pay for things is a great idea.