Here are 6 quick tips that you can do to help recession-proof your life.
- Create a backup plan: Many people are not ready for any type of sudden economic crisis. The loss of a job, bad investments, an increase in current debt, these are all things that can really cause some grief. Many financial analysts recommend that you should have at least enough savings to be able to pay your bills at your current rate for at least 3 months. If you have this already, it does no harm to attempt a 6 month term. This should help you endure the impact of any cashflow problems and allow you enough time to get a new job, or make better investments.
- Think about the future. Take a long look at your current financial situations. Do you have savings? Do you have an investment portfolio that is diversified enough to withstand a poor downturn in the market? Do you have a solid understanding of your portfolio or is a broker managing all of your future wealth? It is a good idea to become as knowledgeable in this area as you can. It doesn t hurt your economic status to be too informed.
- Try to increase your cash flow. (I will go into this into more detail in a future post) There are many ways to do this. You could get a part time job to help supplement your income. (Hint: Try to do it in something that you enjoy, possibly a passion or a hobby this will help the time not feel like work and the extra money is just the icing on the cake) My son made a little extra dough by applying at a local sports card shop. He really loved his baseball cards and now he gets a little extra by working around them for a few hours a week. You could also try your hand at making a little money online ( I will also go into this in a little more detail in the future)
- Change your spending Habits. Start off keeping a daily cash journal. I usually like carrying around a small notebook of some kind and write in it every time I make a purchase. Try to do it for at least 2-3 months to help identify areas that you can cut down on. If you have a pda you can use a spreadsheet program to help you list your recent expenditures. You will be surprised at how much money you are spending at your local starbucks for coffee. By making this journal you will become more aware of your purchases and start making smarter decisions as to whether or not you really need those pair of shoes this month. Identifying needs and wants are also a good saving habit. Try to spend on only items you need during this time period. You will also become surprised at just how much you spend on unnecessary items.
- Get Creative with your money. Challenge yourself every day to come up with at least 1 way that you can either increase your cash flow, reduce your current debt, or just find a way to save more on your monthly spending. Set a goal of say $200 for your first month of savings in addition to your current savings. Try to match that by saving money on purchases that you would normally make and don t need. You can have as much as an extra $400 every month. This adds up to a cool $5k at the end of the year. Try to increase this monthly. Make it an incentive type situation. If you are able to do it for the month you can reward yourself with a trip to the mall for a small purchase or even just some alone time to make you feel better
- Most poor people amass more debt, they use their credit cards unwisely, make purchases that depreciate quickly in the short term, and usually end up in something like bankruptcy. Most rich people learn how to manage their money and have it work for them instead. They amass assets (For those who have read Rich Dad, Poor Dad by Robert Kyosaki, you know the concept that I mention here. Assets are anything that will bring you back more money than you start with) They also get creative when it comes to their spending habits and find different ways to keep more money in their pocket
Here are 6 quick tips that can help you recession proof your life. If you follow these tips and stick to them you can quickly become one of america s quiet undercover millionaires. It all begins with you.