When a recession hits everyone is affected, government, foreign investors, businesses and of course the consumer. Nearly every consumer will feel an impact from a recession. There has been no escaping. The root causes were universal and have a domino effect. Since a recession is an unavoidable occurrence when it does it, it’s important to prepare yourself and your family so you don’t end up losing assets in the process.
Here are 10 rules of engagement that will help you successfully navigate potential pitfalls and wait it out until the economy beings to pick up and revitalise itself.
1. Evaluate and eliminate excessive debt
If your income has dropped or is not keeping up with your growing expenses, you may not be able to service the debt you took on when your revenues were much higher. Any debt can be worked out review your secured debt, loans guaranteed by the administrations, mortgages, lines of credit, and even leases.
If you haven’t already, start reducing monthly costs and overheads.
For more on how to save on your monthly costs check out our article 10 Tips To Reduce Your Monthly Spending
3. Track your finances daily — and start today
Install a key indicator system to track your household spending and have daily, weekly and monthly financial sheet issued. Use these indicators to focus on your most vulnerable spending areas and make sure your most important bases are covered.
4. Reduce inventories
Look for items that do not use, have multiples of or you can simply do without, they could be instant cash just laying around that could be used for more important things. Unlock this cash by selling these items, renting them out, or looking at co-ownership of certain assets.
5. Train and cross-train your family
Saving and reducing can’t be a one-man band, kids, your wife, your husband and other dependents will also have to follow suit in learning to live with reductions. Set the example and then drive it home so that there aren’t unnecessary leakages and manage expectations and frustrations thereof.
6. Review your spending regularly
Use the internet and focus on only necessary expenses, what may feel like a necessity now may not be one in a few months. Look at constantly refining your budget and cutting costs or migrating to cheaper alternatives.
7. Resist sales
Don’t give away your money, we know saving can be hard and the urge to spend especially when a good deal presents itself can be a painful exercise. If the sale is on necessities like food or toiletries it can be worth adjusting the budget however that new pair of shoes or handbag will have to be put on the backburner for now.
8. Expand your income
Look at other forms of income, can someone in your home get a job, can you add freelance work to your weekly workload, can you start a part time business, can you rent out a room or second home. These are all options you need to explore in the time of a recession
9. Seek out support
Look to friends and family and create support groups that help spread costs such as bulk buying grocery clubs, car pooling and look at smart ways to share expenses and draw extra savings.
10. Focus on quality
That’s what wins in the long run. Never forsake this principle, try to buy things that have the longevity of use and re-use. Don’t skimp on the price when it comes to certain items, it may cost you a fortune in the long run.
Don’t let the recession get you down
If you’re feeling overwhelmed by your current financial situation, feel free to contact us. To Speak to one our consultants about debt review contact us here.