How to Survive This Economy
10 Ways to Survive the Economy
It’s no secret that this economy isn’t doing so well. From college graduates not finding work to senior citizens struggling to make ends meet, it can be hard out there, particularly if you don’t have much money saved up or anyone else to fall back on. However, if you follow these 10 tips, you’ll feel more secure in your finances and be able to budget better than ever before. So get started and let us know how things are going!
1) Know Your Costs
The best thing you can do as a small business owner is know what your costs are, from every perspective. If you know how much money it takes for you to bring in an additional $1 of revenue, then you’ll be able to adjust your prices accordingly when things get tight.
Knowing your costs will allow you make better strategic decisions about raising or lowering prices when things get tight because you’ll know if raising prices will help keep your doors open.
2) Maintain an Emergency Fund
It’s difficult for anyone, even in good economic times, to hold down a job and save at least three months’ worth of living expenses. But that’s exactly what everyone should be doing, regardless of how bleak things may seem.
If you don’t have enough money in savings to tide you over if you get laid off or your hours are cut back (or God forbid something worse happens), start working on it now. There’s no such thing as too late when it comes to building an emergency fund, just ask all those people who lost their jobs in 2009 and 2010; unemployment remains stubbornly high despite the fact that companies have been adding millions of jobs over that same period.
3) Know Your Expenses
Keeping track of your spending entails keeping track of your outgoings throughout the month. It’s a must do activity that you should do every day for the entire month.
When you first start tracking your expenses, it may seem like a lot of work, but understanding why it’s vital to do so and how to do so with minimal effort will help you stick with it and become more aware of your spending.
After you’ve created a budget, which is a monthly spending plan that takes into account your income and costs, keeping track of your expenses on a daily basis is critical to staying on track.
You won’t know when to stop spending in a certain category if you don’t track your money.
In a few essential ways, tracking your expenses throughout the month makes you accountable for your finances.
4) De-Clutter
If you have a lot of stuff lying around and don’t have time or energy to sort through it, consider hiring someone to do it for you. For just a few hundred dollars, he or she can give your house a spring cleaning that will cut down on clutter and make your space feel fresh again.
It may even motivate you to keep everything clean in between visits. This can be a good option if you are currently on a tight budget and want extra cash for something else!
5) Save on Utilities
If you live in an area with a high cost of living, it can be tough to make ends meet. Try cutting down on utility costs by turning off lights and unplugging appliances when they’re not in use. If you have gas heat, consider changing your thermostat setting for a couple hours each day during off-peak times (early morning or early evening).
This will keep your house from heating up as much while you’re at work and sleeping. Be smart about it: if you set temperatures too low, pipes can freeze or burst during extreme cold spells, not just a waste of energy but also potentially dangerous!
6) Make a Budget and Stick to It
If you can’t afford something, don’t buy it. It’s really that simple. When you make a budget and stick to it, only then can you know for sure what your real financial picture is. Keep track of all your bills (don’t forget about your credit card balance) so that if you need help with money in an emergency, or simply want to start saving more now, there is no mystery.
7) Learn to Control Impulse Purchases
Retail therapy is all well and good, but it can get expensive. To buy less and save more, train yourself to think carefully before buying something, especially if you didn’t intend on it when you walked into a store.
Instead of being seduced by sale racks, coupons or impulse buys at checkout (gift cards!), try asking yourself: Do I need it? Is there something else I want more? If so, can I wait for a better price? Can I get a coupon? Can I borrow/rent/share it with someone?
8) Stay Away from Personal Loans (Credit Cards)
If you find yourself always falling short on cash, it’s time to sit down and make a budget. Don’t think of it as limiting your spending; think of it as empowering yourself with knowledge.
Just knowing how much money you have coming in and going out each month can help you organize your spending and keep yourself from making impulsive purchases that don’t align with your goals. After all, if you spend more than what you earn each month, eventually you run out of funds and then what? It’s important to note that many banks now offer free online budgeting tools.
9) Do Not Cash Out 401k’s Until Age 59.5
How you handle your retirement savings is a personal choice, but cashing out too early can have serious financial consequences. If you’re under 59.5 years old and cash out of your 401(k), you’ll typically owe ordinary income taxes on those withdrawals and possibly penalties as well.
For example, if you cash out a $50,000 account at age 40 and then want to re-contribute it when you’re 50, it will be treated as an additional $50,000 of taxable income that year. In most cases, it makes more sense financially speaking, to avoid taking money out of your 401(k) if possible; deferring taxes is always smart when possible.
10) Start a Side Business
This can be difficult because you will likely be working around a full-time job, but starting a side business is an excellent way to earn some extra cash and develop skills that will serve you well once your day job ends. Work on weekends. Before dinner or after dinner when most people are working; perfect time for you to work on something other than your full-time job.
You may also want to see if there are any part-time jobs available at night in your area which might help supplement your income in case you need it. Don’t go out as much, and instead choose nights where you don’t have plans, so that you can work late at night and get things done during your free time after work.
Bonus Tip) Rent Out a Room in Your House
Wanting to help out your friends and make some extra cash? Offer them a room in your house for $200 per month. If you rent a four bedroom, two bathroom house, that could earn you up to $3,600 per year. That can be an easy side income as long as you maintain your day job.
Keep in mind that like any other money making opportunity, success with rental properties depends on your finances and ability to leverage things like tax breaks, home equity and favorable lending terms. You’ll also want a healthy amount of cash reserves on hand and not just in case of emergencies (although those will happen). You should always be saving up for expenses such as yearly property taxes and homeowner’s insurance.
Final Thoughts
Thank you for taking to read my story. I hope you gained some good insight from it. Times are tough these days with, gas prices, food costs, power bills and more. We all could use some help until things get better. Good luck.
