In recent months uncertainty and pessimism have dominated the economic and business news. Negative factors such as the volatility in oil prices and the weakening of the US economy have made many of us aware that we need to think seriously about our financial future. But before you start to panic, remember the famous words by Rudyard Kipling “Keep your head about you as everyone is losing theirs”. First and foremost, you should generally try to control your spending and make sure that you do not put your future financial goals in jeopardy. Here are few guidelines to bear in mind during challenging economic times.
Don’t forget about your rainy-day savings
Before getting involved in risky investments such as stocks, you should make sure you have a rainy-day savings fund. Generally, that means having six to 12 months of income in savings before you get into more investing. Your savings fund could help sustain you through a salary freeze/cut or job loss.
Don’t be short-sighted
Many people may be tempted to use credit cards instead of cutting costs and looking for ways to optimise income. This is short-sighted and only means additional monthly costs because you have to repay principal and interest. If you lose a job, the situation gets worse. A disciplined budget and under-spending will help you insulate yourself from future financial hardships.
Don’t stop saving for retirement
In times like these, most people tend to focus mainly on day to day issues like current bills and savings. But the fact is, you are all still going to want to retire at some point, so that means remaining disciplined about saving for retirement. This means that you still have to make sure that your holdings are diversified and balanced. It’s not wise to ignore or discontinue your retirement plan, as you may live to regret this.
Don’t take your job for granted
During an economic slowdown, it’s important to understand that businesses, both big and small may be under financial pressure. And when that happens, many companies will try to reduce expenses any way they can. In this type of situation employees should generally try to do all they can to make sure their employer has a favourable opinion of them. This may mean coming to work early, staying late and of course doing their best work at all times. While there is no guarantee this will save your job, it could make you important enough to your company to ensure that you’re kept on the payroll.
Don’t ignore common sense
There have been many cases in which fraudsters promising overabundant returns managed to trick many investors. Some people saw housing and the stock markets as fool-proof investments, while others spent much more than they had. Personal finance, simply boils down to common sense. You have to eliminate high-cost debt and stay on a budget. You need to make sure that you own a home you can afford and enjoy, as opposed to seeing it as a get-rich-quick scheme. In other words, be prudent, save money and invest wisely. Getting back to these basics will help to rebuild your portfolios and weather any storms that may lie ahead.
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