What living our life comes down to, are the choices that we make. This whether it’s the type of work that we do, the business that we want to build, or the personal lifestyle that we want to lead. What’s often overlooked, is the connection that these forces have with one other.
The fact remains, that interdisciplinary thinking goes a long way. This might sound a bit obtuse for some, but know that the most important life decisions, can be made a lot more easier and accurately, by thinking more basic and within ones capabilities.
What any business essentially comes down to, is creating some sort of value for the end consumer. Our personal lives, are all about maximizing our utility, which is measuring our happiness and satisfaction, that’s gained or realized from being self sufficient.
Protecting Yourself In Any Economic Crisis
Once the media begins to rant that the economy is starting to depress, what most will do is become frantic.
Most worry about their immediate welfare, how they can sustain their current standard of living. How they can realize financial freedom because of the upcoming financial crisis.
What needs to be defined, is what the word economics actually means. This in terms of thinking about your own situation, and how you can benefit from it’s true meaning, and then steer that to your financial advantage.
The Macro Economy
Begin by ignoring what the news says about the economy. That the stock market is now in a bear market, that there’s too much demand on commodities and not enough supply.
That rapid inflation, the spiraling mortgage defaults, and the ever increasing unemployment rate is getting out of control.
These are economic conditions that you can’t do anything about. All you can control, is the immediate economics in your own household. Economics is the art of managing an entity, so it will remain sustainable. In your personal life, that’s something that you can control.
What all you can do in any condition, is manage your household the best you can, especially when it comes to money. Make sure that the economics of it, are flowing positive.
Spending Less Than More
Our grandparents didn’t earn that much money, so they lived frugally. They were conditioned to keep their spending less than what they earned. It’s been proven that the fastest way to financial disaster, is spending more money than you take in.
Know that it’s possible to maintain your current standard of living, while cutting down on your expenses. For instance, you can choose to watch a movie at home, rather than going to the movie theater. Choose to buy a used car, rather than a brand new one.
Try To Pay Cash For Everything
Every time that you use your credit card, and you’re not able to pay it off before its due date, and once the statement arrives, what you’re doing is committing your future earnings, your positive cash flow, and giving it to the credit card company.
These are the future earnings, that should be going into your regular household expenses, your savings account, or that well deserved vacation. But what you’re becoming instead, is a victim to debt.
The only money that you owe, should be in a form of a mortgage by buying real estate, which is guaranteed to increase in value. The other is a car, as most can’t pay cash for one.
When paying cash, especially for larger items, try negotiating for a cash discount. Once the economy happens to go into a tailspin, and credit becomes difficult to get, this is when cash comes king.
Saving For The Future
Begin by writing down your short and long term financial goals. Note the reason why you need save a certain amount of money, such as for a down payment on your first home. It could also be to save for retirement, or to pay for post secondary education for your kids.
Give each financial goal a dollar amount, as well as a time frame. In order to properly save money, you need to know exactly what you’re saving for. You need to have a valid reason, why you’re putting your money aside.
Make sure that you create a separate savings account. Realize that just leaving that money in the checking account doesn’t work, as you’ll find a way to spend it somehow.
Also make sure that you’re able to easily make deposits into that savings account, or transfer money into it. Banks can set up automatic deposits on a monthly basis, so you’ll never see that money in your hand. The easiest way, is treating it like another monthly expense.
Then Watch The Money Grow
Over time, what you’ll see is your money starting to accumulate, which is both rewarding and motivating. Most will want to save even more. Saving and investing, can then become a habit in a positive way.
What you need, is a conservative yet reasonable budget that’s written down. Then you need to track exactly where all of your incoming money is going out, this so you can make adjustments on how you spend.
Having a budget tells you how you can manage your money, and help you to delegate. What budgeting needs however is discipline, but never sacrifice your current lifestyle. It’s just a personal savings plan, to get where you’re financially going.
Eliminate All Your Debt
If you have debt, then first focus on eliminating that debt as soon as possible. Also put away a small amount aside, this for unforeseen emergencies. The majority of it, needs to reduce your debt.
The reason why you should do this, is there’s no point paying 20% percent interest on credit card debt, when all your savings does is earns you 2% to 5% percent interest. So eliminate anything that you owe first, before you begin saving and investing.
Getting Into The Habit Of Saving
After a while, what you’ll begin to do is systematically contribute towards your savings account, this by habitually putting all excess money that you generate, into that savings or investing account.
This could be found money such as an inheritance, bonuses, raises, and any other unexpected forms of money, that can go towards saving. It also won’t compromise your lifestyle, as it’s money that was unexpected.
There’s no secret to saving money. All that you need is to start doing it. What’s often the most difficult, is having the discipline to make it a habit. But once you begin to see your finances grow and gain momentum, you’ll then become hooked on saving for a brighter future.