7 Tips to Help Manage Your Money During a Recession

22 Mar

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Hey folks. There has been much talk in the news about a slowing economy and fast-approaching recession. What this means to most people is that job security is threatened, the cost of living increases, and people are generally fearful of their financial futures. Well fret no longer. Here are a few tips that I think may better allow you to survive and thrive in any economic condition:

7. Walk Whenever Possible – With the cost of energy being so high, many people have already begun walking as a way to get-around instead of driving their cars. Plan your days effectively and avoid driving as much as possible. Those extra dollars you save through out the week add up and could easily be used to pay a cell phone bill or some other common expense.

6. Eat At Home – In today’s world, this is hard for many of us to do. But when fighting for financial freedom, sometimes it’s necessary that we sacrifice a few frivalities now in order to better enjoy/afford them later. By preparing your own meals, you can expect to save somewhere around $200 a month. Not only is this is a great way to trim down on expenses, but you can also use it as an opportunity to buy healthier foods and develop healthy dieting practices. Just like building wealth, being healthy is like running a marathon instead of a sprint. Develop these practices for the long run.

5. Read books on personal finance and investments – You can not afford to not understand how to grow your money. It will cost you hundreds of thousands of dollars in your life-time. If you haven’t already, you should read Rich Dad, Poor Dad by Robert Kiyosaki, Think and Grow Rich by Napoleon Hill, and The Intelligent Investor by Benjamin Graham. Remember, increasing your knowledge is the best way to grow your savings account.

4. Pay Down Your Debt – If you have credit card debt, pay it off asap. This is a great time to do so with interest rates being so low. Plus, the sooner you pay off your debt, the sooner you will be able to save and be able to invest in better opportunities. Debt will hold you back from achieving financial freedom so freeze your frivolous spending and start paying credit accounts off. Don’t close them though. You’ll need them to remain open to optimize your credit score.

3. Find a New Savings Account – You need to know how hard your money is working for you at all times. You should also be looking for ways to make it work harder in the safest way possible. One of the simplest things you can do is to at least make sure that you’re getting the highest interest rate possible in your savings account. Doing anything else is like giving away free money. Because of the recent cuts in the Fed Rates, it’s going to be hard finding any savings account that yields over 4%, but make sure you get the highest rate you can find (use google).

2. Get a Second Job – This tip might sound crazy to some people, but it’s always great to have some extra income coming in if you have the time to do it. With various markets shaping up the way they are, it’s a great time to buy many assets that may have taken a significant dip in price but not in value. Getting a second job would help provide you with more cash to pay down your debt, or save and use as investment money while it’s a buyer’s market. Any other use of a second income may be wasteful.

1. Buy, Buy, Buy – I strongly agree with Warren Buffet when it comes to many (if not all) of his investment strategies. He says something to the effect of this: When people are afraid of the economy, buy everything; when people are buying everything, be afraid. What this means is that there are tons of opportunities out there to make huge gains over the next 5 to 10 years. For example, you can find a really good piece of property for much less than was paid for it not that long ago. By conducting an analysis of the property, you can walk away with it at a price that’s far below its appraisal value. When the market rebounds and prices stabilize (the market will stabilize. It always does), then you should have seen a nice gain on the value of your home. This same strategy also applies to the stock market. You should consult a stock broker to determine which companies are currently undervalued but will still be doing strong business over the next 5 to 10 years. Those are the companies you’ll want to buy as much as you can right now.

In summary, you must educate yourself on financial matters in order to maximize your chances of achieving financial freedom. When you get your Economic Stimulus Package, please pay off your debt and save the rest in a high yielding savings account if there’s any left over. The economic situation only looks bad to those who don’t train theme selves to find the opportunities. Don’t be afraid to buy the right assets, they’ll pay off huge in 5 years. Buy more liabilities, and this recession could be the spark that triggers a financial disaster in your life. Be wise with your money my friends!

Please post any comments, suggestions, or questions. Thanks!

Ray

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11 Responses to “7 Tips to Help Manage Your Money During a Recession”

  1. Tim Ramsey March 22, 2008 at 5:35 pm #

    I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog.

    Tim Ramsey

  2. Allen Taylor March 22, 2008 at 6:34 pm #

    Nice writing. You are on my RSS reader now so I can read more from you down the road.

    Allen Taylor

  3. Emad Mokhtar March 22, 2008 at 8:55 pm #

    Nice article it’s wonderful, I hope it will make effort.

  4. Debt March 23, 2008 at 5:56 am #

    Hi,
    I like the way you write ..Its really different and interesting … keep the momentum going ..I hope tis will really going to help me in future..
    brilliant. .

  5. Bernard Ng March 24, 2008 at 7:05 am #

    I agree that educating oneself in the finanical matters is an important task in our quest for financial freedom.
    During a recession, it is a time for opportunities. Armed with enough financial knowledge, it could be the ticket to finanical freedom.

  6. Jason Hall March 24, 2008 at 5:17 pm #

    Thanks dude. This was a good read. Keep it up. Love the blog site.

  7. Lily March 26, 2008 at 7:32 am #

    I’ve been keeping up with this blog and I appreciate the information that both of you are giving. Keep up the good work!

  8. propertyless March 31, 2008 at 4:19 am #

    wow!its really great to know how to manage our money in a recession.i really loved being and spending time in this site.

  9. abraham shilomboleni May 18, 2008 at 6:46 am #

    Eish,dude you rock.This was quite informative to me and i have learnt so much out of this.

    Keep up the good work!!!

  10. Equity School September 17, 2009 at 8:38 pm #

    Great Article. Graham is considered the first proponent of Value Investing, and I am a great fan of Benjamin Graham myself, I follow most of his rules, I started a site on value investing. The site mainly screens out Low PE, Low PB, High Divident Yeild. Low PB+ High Div etc.. for the India markets. I really appreciate the effort you have put in your blog. Best Wishes.

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  1. Investments on The Finance World For News and Information Around The World On Finance » Blog Archive » 7 Tips to Manage Your Money During a Recession - April 6, 2008

    […] 7 Tips to Manage Your Money During a Recession Read books on personal finance and investments – You can not afford to not understand how to grow your money. It will cost you hundreds of thousands of dollars in your life-time. If you haven’t already, you should real Rich Dad, … […]

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