Have you ever heard that good times don’t last forever? Well, believe it or not, they don’t. With all of the stimulus checks, increased welfare assistance, PPP loans, and other governmental assistance we have received over the past few years, it’s hard to believe that we will not have an endless source of income. However, the government cash infusions have taken us to the economic breaking point we are currently experiencing. Living on less will help shield you in times of economic downturns.
Who knew that eggs would triple or even quadruple in price? Milk costs more than the price of gas (Ain’t that something!). Let’s not even talk about rent being astronomically high! We never stopped to consider the cost of free money and the impact that it would make on our future lives. We may have needed the infusion of cash into our economic system to stave off a total financial meltdown due to the unforeseen outbreak and spread of COVID-19. I’m not an economist, so I can’t say what the impact would have been if the Cares Act had not been passed. What I can say is we are paying the price for it now via roaring inflation.
It’s easy to feel safe and secure when everything is going well. In these times, little thought is given to “What if things do a 180-degree turn?’ It is in times of feast that we must prepare for famine.
Everything about life rolls in cycles. Times when we are up and times when we are down. There are times when we are happy and times when we are sad. Times when the economy is on fire and times of economic slowdown. It is inevitable.
I cannot stress enough how important it is to save in times of feast to have peace in times of famine. Here are a few things you can do to build that peace of mind when economic hard times come knocking.
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Build An Emergency Savings
The industry guideline is to have 3 to 6 months of living expenses to cover necessary costs in the event of job loss. Set your goal to a year of living expenses in this economic environment. The experts predict that as 2023 continues, more people will lose their jobs. If this occurs and you are one of the unlucky ones who lose their job, you may have difficulty obtaining another quickly. So while you are gainfully employed, save as much cash as you can. You ask, “What if I can’t save that much?” It doesn’t matter how much you begin with as long as you start. If you only have $5 left at the end of the week. Start with that $5. Consistency and time is the key. Start building your emergency fund with what you can!
Live On Less
Learn to live on less than what you make. At the end of the month, your income should always exceed what you need to pay out. Living on less ensures that you can contribute to an emergency savings plan. Go through your monthly expenditures and see what you can cut out of your budget or, at the very least, what you can cut down on. Do you need to spend $300 a month on dining out? Probably not. Trust me, buying groceries is cheaper, especially with the Flashfood APP.
Setup A Budget and Stick to It
Yes, you need a budget. How else will you know where you are spending all of your money? Budgets are significant because they provide freedom. Freedom from overspending and the guilt that overspending brings. Budgeting will expose the areas you have overindulged in and show you the areas you can cut back in to live on less. Lastly, your budget is your road map to financial peace during economic chaos. Establishing a budget now will help determine how much you can start stashing away in your emergency savings fund.
Stop spending every dime. The owners of Nike, Michael Kors, and the like, will be okay through a crisis. The question is, will you?