As one reads newspapers and magazines today, what strikes one are frequently-used words: Slowdown, slump, Euro debt crisis…The slowing global economy has severely hit ordinary people, who are reeling under the double whammy of soaring inflation and economic slowdown.
Worse, all the good investment and money-making opportunities seem to have withered in the current financial turmoil. Even the scenario in the job market looks grim. In such hard times, tiding over the current crisis has become the prime concern for the people across the globe.
For the moment, it’s best to cut one’s losses if one is in distress and increase the cash levels in one’s portfolio to ensure that he survives till the next economic boom.
First, one should try to streamline one’s finances. For this, one has to cut down one’s loans and get rid of unnecessary expenses and adopt a prudent spending and saving strategy. However, if one still feels the financial crunch, one should try to renegotiate payment terms with landlord, bank or any lender, among others, as everyone is aware of the current market conditions and would rather have delayed payments than a default.
Once one is able to free up some money, the next priority should be to save for the rainy day, in whatever way one can. We must remember that a penny saved is a penny earned.
In fact, one really shouldn’t wait for a crisis to happen before one starts to worry about one’s financial situation.
We must remember that a lot of good things are just ephemeral. One should, therefore, be prepared all the time. Save as if there’s always a financial crisis looming in the horizon. Save as if one’s income would stop flowing anytime soon. If one has this attitude, he/she will be able to tide over a crisis when the next economic turmoil hits.
It is also time to evaluate one’s lifestyle and see that one is not leveraging beyond one’s means. “It’s time to live not just within one’s means, but below one’s means. That will give you the margin of safety to handle bad times, present and future,” says Jennifer Openshaw, author of The Millionaire Zone.
According to a Mastercard study, the best way to avoid a financial crisis is to spend less than one earns. Thus, one will be better prepared for unexpected expenses or life-changing events that might dramatically reduce one’s income or increase one’s expenses. It also enables one to have the freedom to make personal choices about one’s job, one’s residence, and many other areas of one’s life.
It might sound philosophical, but I am reminded of Meher Baba’s (1894-1969) inspirational words: “Don’t worry, be happy”. Remember Bobby McFerrin who wrote in 1988 the famous song, inspired by Baba’s words.
Bill Gates rightly said in a speech in Georgetown University: “Difficult times can launch great ideas.” “The current crisis,” Gates said, “is an opportunity for innovation.” He likened the ongoing crisis to the economic woes of the 1970s, which gave rise to America’s information technology boom, during which Microsoft was born.
Let’s hope the “winter of discontent” will pass, human ingenuity and “great ideas” will cure the economic malaise and people will rebuild their assets again.