Photo: Flickr / Paul Keller
I am almost certain that many of us have felt the effects and aftermath of the recent economic recession.Whether we lost our income due to job cuts or we lost our home due to foreclosure, we have all felt the financial pressure to survive during these tough times.
All we can do is try to make it out of the recession with some personal dignity, some personal savings, and hopefully some precautions that we need to take in case another crisis comes into our lives.
It can be a huge personal defeat to lose our job. Maybe some of us lost our jobs and were forced to re-enter the workforce by accepting a position that offers a lower salary and does not necessarily utilise our skills and experience. I always tell people that some income is better than no income. At the end of the day it doesn’t matter where our money comes from because it can all be spent in the same places.
As this is an election year in the United States the stability of the economy is still a little bit unsure, especially from an outsider’s point of view. Every time that opposing presidential parties appear together on television and argue like children in a sandbox the market becomes more volatile.
I am not sure if the emotional aspect of a recession is as important as the financial aspect but both are definitely important. Some of us not only lost our money, but we also lost our lifestyle and maybe our circle of friends.
I am not sure if people ever fully recover from a financial (or personal) crisis. Our money mentality for some will forever be changed as we live in constant fear that another crisis is just on the horizon. This mentality is very similar to people who survived the Great Depression of the Dirty Thirties. I have clients who to this day tell stories of their financial lives during a time when they couldn’t even afford to buy a loaf of bread each week. Hopefully most of us will never have to live through those types of financial circumstances.
Here are some tips to help you prepare for market uncertainty, job loss, and/or another financial crisis:
Have a Back Up Source of Income. Having a secondary income helps us save money while working two jobs. It also helps lighten the financial load if we ever lose our primary source of income. If we ever do lose our primary income at least we can use our secondary income to stay financially afloat until we find another full time primary source of income.
Save a Little Bit More Now. Saving an additional amount each pay check or each month is a great idea because it helps our savings accumulate over time. Saving a little bit of extra money every month is a lot easier than trying to come up with all of our monthly expenses in one lump sum payment if ever we do lose our income.
Learn to Live on Less. Go over your personal budget and see where you can make cuts in your monthly spending. Most of us may be living with something that we don’t necessarily need to survive. Just because we can afford to have something doesn’t necessarily mean that we should buy it. The transition to living with less during the loss of our income will be easier if we are only living off of the essentials.
Secure Your Investments. If we are an aggressive investor with a high risk investment portfolio then maybe we should reconsider our current investment strategy and add some secure investments into our portfolio. This will help protect our assets in case of a financial crisis.