The effects of an economic crisis are far-reaching. It may begin by collapsing Wall Street but the ripples can affect millions of families. The worst thing about a recession is that no one can predict it. This surprise element further deteriorates the general sentiment. However, if you stay in touch with the market conditions and listen to experts, you can sense when a slowdown is around the corner.
Although there is little you can do about the crisis, you can certainly protect yourself from its impacts. Here are the steps you can take to survive an economic crisis.
Make a plan for your debt
In normal circumstances, it is the best strategy to reduce your debt. You can even pay more than your monthly EMIs to pay off your loans. However, during an economic crisis, it is advisable to pay only the minimums. You don’t want to pay extra towards your debt and end up with no cash for other essentials. If you have piled up credit card debt, you may check with your lender about the possibility of reducing your interest rates.
The best way forward will be to steer clear of more debt. It could mean living a simpler lifestyle and letting go of certain luxuries. It will be easier to follow this way of living once you know that it is temporary.
Multiple streams of income
Since there is no assurance of job security during an economic crisis, the best option is to generate an alternate source of income. This can provide you with some much- needed relief if you were to lose your job. You can use your free hours after work and sign-up for a freelance job. There are various websites where you can register and bid for online projects. These websites offer interesting projects related to content writing, graphic designing, website building, etc. If this doesn’t work, you can simply offer services such as babysitting or cooking to make some extra cash. The key is to have a reliable customer base to get a constant stream of work during your low times.
Spend your money wisely
Even if everything seems to be going fine, it is advisable to review your expenses when the economy is distressed. It could mean cutting back on your unnecessary expenses and living on a budget. Try to save as much as you can and you may temporarily stop contributing to your children’s education fund. If you have been thinking of buying a house, try to postpone it for a short while. Although the cheap prices may seem inviting, you don’t want any added stress of mortgage.
Have some cash handy
Banks invariably take a hit during an economic crisis. There have been instances where even big banks have drowned in the aftermath of a recession. To protect your money, it is a good idea to spread your savings across different banks. It will also help to keep some cash at your home, just in case.
Avoid finding a new job
The focus should be on keeping your current job. Once you start looking for another job, you may get uninterested at your current workplace. It may even reflect in your performance at work. During an economic crisis when organisations are not doing well, they try to cut costs. More often than not, employees become the scapegoats and are shown the door. Since the jobs are scarce in a tight economy, try everything you can to keep your job.
Avoid risky investment
Now is the time to save every single penny that you can. It is suggested to avoid any risky investment options such as stock markets and mutual funds. Since you never know how low the stock market is going to dip, such investments can deteriorate your wealth. It is better to put your money into government-sponsored schemes instead. They are considered to be safe investment options and will always return your money.