How to manage your finances while waiting for an economic crisis?
In this article, I want to give you some useful advice to manage your finances because of the (probable) economic crisis that we are going to live in. Find out now how not to be caught unprepared and overwhelmed by this difficult moment, but which if well managed can turn into an opportunity.
In these days of quarantine, I notice conflicting attitudes around me and in myself.
Some approach this period as a positive period in which to rest and simply take advantage to see some series of work.
Others are behind the contagion statistics and get depressed. Few think and plan for the future.
But how can I plan for the future if I don’t yet know when all this will end?
I agree it’s not an easy time, but if you want to have a (rosy) future you can’t wait for the course of events.
You can and should certainly try to manage the situation better and prepare for the worst.
Your financial choices need to be adapted to the changing financial situation around you.
Ok, but what should I do? Let’s see immediately what are the possible concrete actions to be taken.
In this article
- Secure your finances
- Create an Emergency Fund
- Acquire Liquidity
- Reduce the risk profile of your Investment Portfolio
- The study, acquire new skills and search for new revenue
- Create valuable relationships
- Can I improve my Finances in this situation of Economic Crisis?
Secure your finances
The first move to make to secure your finances is to minimize the risks.
Today for everyone there is the risk of losing their jobs and in the best case of seeing their income reduced.
What can you do to exorcise and limit this risk?
I try to summarize some practical actions useful to everyone.
Create an Emergency Fund
Even an employee of a solid company in a possible Economic Crisis has to worry.
At best, you risk losing bonuses, incentives, and promotions.
At worst, the job is obviously at risk.
You can be the best salesman, accountant, or technician, but companies remember they look almost exclusively at profits.
That’s why the first thing to do is to make sure you have an Emergency Fund to draw from to meet your daily expenses.
The size of the fund should correspond to 3/6 months of one’s salary, and in any case, the time needed to relocate.
It has to grow with age and as your salary increases.
If you don’t have this liquidity on your account today, I recommend that you put in place an Extreme Plan.
You have to try to minimize expenses (not too difficult in quarantine) and save decisively.
You need to identify exactly all the expenses you can cut and prepare for radical choices.
Imagine what you could give up to reduce your expenses and start eliminating all unnecessary expenses.
If you have not already set up an emergency fund, you absolutely must create it.
An emergency fund is always useful and this can be a good opportunity to set it up.
In any case, even if you already have a good liquidity fund, try to accumulate liquidity.
Liquidity is fundamental in the management of one’s finances because it also allows psychologically to overcome crises with more tranquility.
Having cash will also allow you to invest at balance prices when the whole crisis is over.
For many, the pandemic could be a unique investment opportunity.
But it will only be possible to exploit it if you have money to invest.
Reduce the risk profile of your Investment Portfolio
If you read this blog consistently, you know that I often preach good and scratch badly.
Now and then I fall into temptation and I am passionate about high-risk investments.
The criptovalute, the P2P Lending, but also the actions may not represent too high a percentage of your portfolio.
This concept is always true, but even more so at this time.
Today you must try to limit the risks and not expose your assets to excessive losses.
I am not saying to zero your portfolio invested in P2P but to severely limit it.
Also in the equity sector, remember that it is very difficult to predict when the market will recover and it is very likely that volatility will remain high for a few months.
I see too many (para) gurus today advising to invest everything in the markets.
Don’t be in a hurry and don’t get carried away by emotions.
The study, acquire new skills and search for new revenue
The crisis stimulates creativity and the search for new solutions.
At this stage, therefore, you will not have to lose heart but always look for possible alternatives to what you are doing today.
If it is true that you could lose your job tomorrow, what could be an alternative business to set up?
N what do you specialize in or form?
I must say that this long quarantine allows us to learn a lot of new things.
You can read books, listen to podcasts, videos, lectures, discuss online with experts. And you know what? You can do it completely for free!
Even if a job does not come out of it, you will certainly come out enriched.
An opportunity not to be missed.
There is still some time (for many) before being able to leave the house.
Take advantage of this moment to deepen that topic that is close to your heart and that you have not been able to do until today due to lack of time.
You have no more excuses.
Create valuable relationships
Quarantine is teaching us how much we need to relate to others.
Everyone without exclusion also needs at this moment to feel the closeness of other people.
However, building a network of contacts is not a simple game.
Then use the quarantine to select your contacts, acquire new ones and build valuable relationships.
Building a relationship means giving value to others before even receiving them.
At this moment you can listen, try to help concretely, write on social networks (not only Facebook but maybe Linkedin) and create empathy and sharing.
Dedicate yourself to doing it scientifically, selecting contacts, and acting in a structured way and you will see the results.
In your work and personal life do not miss this opportunity to come out of quarantine with a stronger network of friends and acquaintances!
Can I improve my Finances in this situation of Economic Crisis?
If you’ve gotten to the bottom of this article, you know the answer perfectly well.
An Economic Crisis is absolutely a critical moment, but if well managed it can allow you to minimize the damage and in some cases come out richer.
If you have a good dose of liquidity to invest at the right time and to use in an emergency, if you take advantage of this moment to generate new revenue, enrich your knowledge, and create new relationships, you are ready to transform this moment of crisis into an opportunity for improvement.
I am working with this goal and how are you experiencing this moment of uncertainty and apparent tranquility?
Let me know in the comments and don’t forget to follow me on social media and recommend this article to your friends if you found it useful for you.
Hey everyone! My name is Alfred Williams and I am passionate about business and finance. I have been working and managing in these fields for over 10 years. I have expert knowledge of market strategies, financial analysis, and decision-making processes. I also have experience in consulting and budgeting. I'm excited to use my knowledge and expertise to help others achieve their goals. Follow me for the latest insights on business, finance and decision-making. Business, finance - let's get started!
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