Saving money and investing wisely
The easiest way to survive tough economic times is by saving, and creating a buffer. Most people spend indiscriminately, and once they are hit by tough economic times, they end up sinking into debt just to survive. As much as saving is a good idea, it’s not the best use of funds since the funds don’t grow, and with inflation, will even lose value. Investing is a more prudent option.
The goal here is to hold the funds somewhere they can increase in value or add interest, what many refer to as “making your money work for you.” There are a plethora of investment options, tailored to each individual’s financial muscle, risk appetite and investment horizon. To get an investment option that works, one needs to speak to an investment professional.
Living frugally entails being economical in use and expenditure, not living like a hermit, and subsisting on the essentials. The best way to go about it is to rationalise each expenditure, and not paying full price for something that one can get for much less. For example, as opposed to paying for a movie premiere ticket, waiting a few weeks for ticket prices to come down makes a world of difference, same as travelling during low seasons when hotel and airline prices drop astronomically. This way, one still gets to live well without sacrificing life’s little pleasures.
Looking for alternative sources of income
As Warren Buffet puts it; “Never depend on a single income.” Having multiple sources of income is very important especially when in tough economic times, which is when many firms will shut down some operations and retrench staff in a bid to stay afloat. Many people are left without a source of income and it becomes difficult to meet their basic needs. Even those who get to keep their jobs have to contend with increased prices of basically every commodity.
This is where having multiple incomes come to the rescue. Multiple incomes does not mean having two jobs, it can be having a “side hustle” or even something passive like an investment. The sky is the limit here, in terms of your options, for instance, one can buy and resell jewelry to their colleagues, offer consultancy services or even babysit as a way of getting alternative income
Pay down debt and refrain from taking up new debt
As tempting as it is to take up debt when one really can’t meet their obligations, it will only lead to one sinking further into a tough position. Debt, if not used for investments is a burden as it carries with it an extra charge that did not need to be incurred. For those who are already carrying debt, a good idea would be to pay it off currently, so that in the event there is an economic downturn, one won’t have to keep up with payments.
Tough economic times are bound to hit one time or the other, and how adversely they affect someone depends on how prepared they are. Surviving tough economic times is easier than it sounds. All it takes is a bit of preparation, by incorporating a few lifestyle changes. With this, one is not only assured of stability when times get tough, but also a more sustainable lifestyle when even in times of abundance.
By Gichuru Muchane: Investments Analyst with Cytonn Investments