Sometimes it seems as though the national and global economy has been in recession forever. And even though government and media reporting is becoming ever more positive, the label of economic recovery does not necessarily translate into the reality that most of us experience. Besides, a state of “economic recovery” means that we’re climbing the ladder, not that we’re out of the hole.
So, while for all practical purposes the climate is still recessionary (and that should be a personal judgement based on your own situation rather than an external assessment) there are some wise actions you can take with regard to your personal finances to keep yourself in a good position or, if that’s not where you’re at, to put you in a better financial state.
Put simply, you’re looking for any tactic that will improve your cash flow and limit your liabilities. And don’t think that recessionary measures are only for recessionary times, maintain them through a financial upswing and watch your affairs improve dramatically.
Keep a close eye on your spending. If you don’t know what you’re spending you can’t control it and control is key. Don’t forget that small expenses add up to large amounts so watch everything and always ask yourself, does this purchase take me closer to my financial goal or further away? And pay attention to how your pay – for example if you regularly use a credit card, you’re more likely to carry the balance over, incurring interest and therefore that purchase was even more expensive.
By monitoring your spending you’ll get a feel for your ‘issues’ – for example, you can’t resist a discount, or certain days of the week are ‘buying days’, or particular products always find their way into your cart whether you need them or not. We all have bad habits, it’s time to find yours and then do something about them. You may need to avoid certain stores. Or change your daily or weekly routine. (Or ask someone else to do the grocery shopping!) Whatever you need to do, do it – recession or no, breaking wasteful spending habits is a good thing to do.
Don’t stop saving.
Admittedly, when times are tough, you may not save as much as you should or you would like but on principle, you should still save a little. Set aside whatever you can. If one part of good financial management is breaking bad habits like unnecessary spending, then another part is maintaining and building the good habits like saving. Even a few dollars help to build your emergency fund or pay into your retirement account.
If you have debt then obviously you should continue to pay it off, even if you don’t have much income to spare, you’ll at least see that debt diminishing. Under no circumstances add to it. Avoid the credit and store cards, you’re only getting in deeper.
Finally, look for other sources of income. Protect your current sources (your job or business) and look around for other opportunities. But if you can diversify your income, now is the time to do it. Consider any underused skills or knowledge. What are your passions and hobbies? Could you leverage those to make some extra? Be wary of internet deals and advertising that promise thousands per month working from home, most are scams. But do look for realistic chances.
Even in a recession opportunities to improve your financial situation exist. They always do. But in a recessionary economy grasping them may need a little more courage.