At moments of crisis, the most discouraging thing for people is the loss of control over their own lives. The disruption of routines frightens and disorients our brains. The pressures come from soaring commodity prices, the threat of the loss of basic income, or the depreciation of savings. Global changes may not affect your life directly. Let’s figure out what to do not to panic in such times.
Get your finances under control
The normal reaction of the psyche to stress is inhibition of activity, but in simple terms – stupor. To get yourself out of such a state, psychologists advise to find something that you can control right now. Making a personal budget is a useful activity that will never lose its relevance. If you know the nature of your obligatory payments, their amounts and sources of coverage, you will be able to regain a sense of ground under your feet. So even if you’ve previously been able to manage money “from memory,” now is the time to assess your finances and make a budget. By immersing yourself in calculations, one gets out of the realm of the speculative and switches to the present moment, which is extremely important in a stressful situation – link.
Increase Your Reserve
If you usually have a reserve of two to three months of living without income, increase it to four to five, or better yet, six months. Don’t forget that this money is not set aside for an expensive vacation. Nor is it capital for investment. You’re creating a financial safety net for emergencies. Yes, this amount will generate almost no income. But that’s the price to pay for your peace of mind. By having a reserve of money, you will remain confident that if you lose your job or are forced to relocate, your family will have money for the first time for everything they need.
Reconsider Your Spending
There is a certain category of spending that is not mandatory, but brings one joy and pleasure. It is not necessary to stop doing your favorite hobby. But, conducting an analysis, you might say to yourself that some costs should be abandoned for a couple of months. Channel the freed funds to increase your reserve or make important purchases.
Buy what you need
If you’ve been planning on replacing appliances or electronics and can do it now, don’t put it off. You may be lucky enough to find items at old purchase prices. New arrivals may already be more expensive than last year’s. If you have a business or hobby that depends on imported goods, it makes sense to take care of buying the necessary materials and things in advance.
Analyze your credit
How much do you owe to an organization or individual, for how long and at what interest rate? You also have to take into account that inflation depreciates the balance. If the designated monthly repayment amount is not burdensome for you, you shouldn’t try to close old debts early. But if the credit burden is weighing on you or your family is already struggling with income, you may want to close some of your debt to reduce the payment to a comfortable level.
Reconsider your strategy
Take a day to make an inventory of your assets. Everything is worth considering: real estate, bank accounts, cash, stocks, gold. Think about what purposes you’ve been saving for, what time it will be needed. Reread your investment strategy, if you have one. You may not want to make any changes in it. Or, conversely, you may need to make a number of portfolio adjustments.
Invest with caution
The most dangerous strategy, with which you are almost guaranteed to lose all of your capital, is tossing from one asset to another during a crisis. Soberly assess your options and do not get involved in dubious speculation.
Many people are dependent on one place of work. If something were to happen to their current company, their income would drop to zero. The stash, of course, will help to survive the difficulties of the first few months. But if your profession has become less popular during a crisis, it will be very difficult to look for a similar position.
It is worth looking for a reserve airfield now. And we are not talking about a complete change of activity. Suitable any part-time work that does not depend on the main place of work.
A good way to make money is to sell old things. And there are several advantages. First, you get rid of the junk that just takes up space in the house. Secondly, you’ll get extra income. The main thing – do not use it for everyday expenses, and put it aside for the future.
Advice from an expert
It is not without reason that they say that the crisis is in the head. Many people tend to blame their troubles on external difficulties rather than on themselves. But sometimes rose-colored glasses also get in the way.
First of all, the crisis may not happen. Regulators all over the world are trying to prevent it. They use different mechanisms which they have learned from the experience of previous crises. They try to foresee possible problems in advance and solve them in a preventive way.
Secondly, even if a crisis comes, it’s not a big deal. Crises come and go. A period of decline is replaced by a period of growth.
– Be sure to rest and have fun, organize fun holidays (even if free or cheap) for yourself and your loved ones: without that you will go crazy. Lead a healthy lifestyle, eat a balanced diet, walk outdoors, exercise, do not skimp on health: more expensive!
All the experts can only guess and make predictions, more or less close to the truth. Some believe that everything can happen as early as next year, and some believe that there are at least three more years in reserve.
Nevertheless, it’s better to meet any crisis fully armed. We decided to take one year as a starting point. If there’s no crisis during that time, great. You’ll have already flexed your financial muscles and secured useful habits. It will definitely come in handy in the future.
Ideally after one year you should have the following results:
- Increase your income
- Reduce expenses
- Repay debts
- Build up your stash
In other words, you will be fitter and stronger if the crisis strikes. And if the experts were wrong, and the economy will be fine, that’s fine.