There’s always some news of doom and gloom in the economy, and for some, the current conditions will send chills down the spine of those who fail to save. The goal is to achieve financial freedom in life, this to protect oneself from these types of unforeseen circumstances.
No news is good news. If there’s any major news that breaks, it’s usually bad. Once you hear anything regarding the plunging economy, what you first think of is the safe welfare of you and your family.
You wonder if you have enough cash saved if disaster strikes, once you end up on the unemployment line.
All the media does is show excerpts, snippets of bad content, when they report about the constant roller coaster nature of the stock market, inflation, supply and demand, or the massive layoffs.
These are all macro economic crisis which takes a measurement of the economy, the temperature of a certain broad geographic area. Stats you have no control over.
Your Personal Financial Economy
What you can control however, is your own household economy. This definition of economics is the financial management of your family or business, something you have complete administration over.
It can become an efficient art and a science, when it comes to managing the financial situation of your money.
A logical reasoning for the effective functioning of your capital reserves, this especially when it involves saving.
What you’re responsible for is sheltering yourself as financially well as possible, to protect yourself from the ravages and the fluctuations of the world economic condition.
Spend Less Than You Earn
This is the biggest lesson you can learn from your grandparents, where debt rarely existed. They earned very little, but lived well and within their means by not overspending.
They kept expenses minimal, adapting to survive within their paycheck after taxes.
The slippery slope when it comes to financial disaster is spending more than you earn, as the burden of debt raises its ugly head.
It’s entirely possible to maintain the current standard of your life, while cutting out optional frivolous spending.
This can be easy as watching a movie with popcorn at home, instead of going out to the theatre. Frying up a steak on the BBQ, rather than dining out.
Always Pay Cash
Once you purchase something by using a credit card, and you’re not able to pay it off when the statement arrives, all you’re doing is committing your future earnings to the credit card company.
The future earnings needed to pay your routine household expenses is lost, as what you end up in is the economic slavery known as the credit trap.
The exception is purchasing real estate which increases in value, such as buying a home which appreciates over time.
When paying cash for larger items, try negotiating a cash discount. Once the economy begins to falter and credit becomes harder to get, cash becomes king.
Also, find ways to buy wholesale or in bulk instead of retail, to lower your costs further.
Save The Money Before You Spend It
If there’s an expensive capital item you want to purchase or need in the near future, then start saving small amounts in a savings account, this towards that purchase. Save until you have the cash to pay for it.
If you have say 8 years before your child enters college, then estimate what the tuition might be at that time.
Calculate how much you’ll need to save every month, so you’ll have the funds the year they graduate from high school.
Save For A Rainy Day
Constantly be stashing away cash for unexpected emergencies, inflating living expenses, or that well deserved vacation.
There’s nothing that causes more insomnia than debt. So forget the sleeping pills, sleep better at night with the peace of financial freedom.
You need to stash away some additional cash for sudden personal emergencies, such as that leaky roof or getting the car fixed, that dreadful meeting with the dentist, or losing a job.
Once you have a cash cushion you can access, then magically, you’ll stop worrying about money, as your attention focuses back to living an enjoyable life.
The one thing most fear during an economic crisis is not having enough money in their savings account, they can willingly withdraw from for emergencies.
The Advantages Of Saving
What most don’t know is more individuals became millionaires based on a per capita basis, during the Great Depression in the early 1900’s, than any other era in modern history before the Internet.
This was a time when the economy plummeted and panic set in. The stock market crashed, inflation shot through the roof.
The unemployment rate exploded sky high as businesses and individuals went bankrupt. Most lost their jobs and their homes.
It was those who had saved and had cash reserves who were able to buy these houses, properties, and entire companies for pennies on the dollar.
They ended up becoming millionaires because they prepared for the economic storm called the Depression, and they knew it wouldn’t last forever.
Cash Remains King
Every dollar that comes in the door, start with immediately saving 10% of it, by putting it into a savings account, and call it your cash cushion.
Even if you need to work an extra job or cut down on entertainment, it’s mandatory you start this today. As time passes, it will become a habit, as you’ll rest better on your mattress full of money.
You’ll live your life with more confidence, knowing you’ve achieved one of the biggest hurdles in life, which is financial independence.
You’ll also be protecting yourself, from the big bad wolf that is the economic crisis.