We get quite unexpected surprises from life every now and then! Economic collapse, market meltdowns, accidents, traumas, and recessions can happen anytime. You never know how bad it will affect your financial condition.
We can’t predict any financial crisis heading our way. But, we can have an accurate financial plan that will help us get through the hard times. Here we’re presenting 7 important ways you can prepare for the financial crisis beforehand.
1. Start Paying off Debts
Interest and the repayment of the credit card loan are the last things you will want to pay when you are under a financial crisis. Instead of paying in small installments, clear the full amount by the end of the month and get the credit card burden off your shoulders. [1].
First, check out all the credit balances. Try to clear the lowest balance. Your goal is to clear the debts in the shortest time possible. Likewise, clear the outstanding balance of all credit cards.
It might affect your savings but it can help you prepare for the tough times.
2. Cut Down Your Monthly Expenditure
Savings come handy in the financial crisis. The more you save, the better you can deal with the recession or market meltdown period. There are many ways you can reduce your expenses and save that money for the future instead.
For example, stop regular parties with your friends and colleagues, go to work by bus or public transport, consider a library for entertainment, and cancel the expensive monthly subscriptions for magazines and entertainment websites [2].
You will be surprised to see how much money you saved by the end of the year. You could use it to clear your debts with interest, save it for the future, or make a smart investment.
3. Consider a Second Source of Income
Today, companies are in search of talented people. Sure, you already have a job. But, why not make more income by joining a part-time job? If nothing else, you will at least be able to pay off your debts sooner. You can use your talents or qualifications to get another job.
For instance, if you know music, you could open music classes for children. Encourage kids to learn different musical instruments and the basics of music. The 1-2 hours of music classes every day will earn you quite a good amount every month.
You can also look for part-time jobs online, such as web designing, search engine optimization, digital marketing, call center services, and more. If the second job idea doesn’t sound good, you can rent your idle property.
4. Keep Your Insurance Policy Up-to-date
Have you got your personal properties covered? Have you purchased the medical and life insurance? You never realize the value of insurance until the financial crisis hits. Accidents and natural disasters cannot be predicted. You can’t save your property or health from natural calamities.
But, the insurance will provide you with financial assistance during tough times. Make sure that you check the coverage plans before buying insurance.
The least you can do is take a life insurance policy. This way you can rest assured that your family won’t suffer from the financial crisis.
5. Never Overlook Maintenance
It is better to eat nutritious and healthy food than having to pay a fortune for medical expenses in the future. It is better to get the cavity in your tooth filled before you end up getting a root canal.
Similarly, you should invest in the routine maintenance of your assets before they catch a bigger problem. Keep your health, property, and cars maintained. You don’t save by avoiding the routine maintenance of your assets, instead, the damage due to negligence can turn out pretty expensive in the future [3].
6. Sell Assets Online
There are many online websites that allow people to sell second-hand goods for good value. You only need to click some pictures of the item and place an advertisement on the second-hand goods market with a proper description. That’s it! You will start receiving bids from people who are interested in buying them [4].
You can sell the items that are no longer useful to you. For example, an old-school couch, the garden sofa, a recliner, any home appliance, a grinder, etc.
7. Pay Your Bills on Time
Whether it is utility bills or credit card dues, you should make a habit of paying off all the outstanding balances before the due date.
Regular payments improve your credit card score.
- “8 Steps to Prepare for a Personal Financial Crisis/” InvestingAnswers https://investinganswers.com/articles/8-steps-survive-personal-financial-crisis,,
- Fontinelle, Amy, “10 Ways To Prepare For A Personal Financial Crisis” Investopedia, June 25th 2019 https://www.investopedia.com/articles/pf/11/prepare-for-a-financial-crisis.asp,
- Nance-Nash, Sheryl, “7 Ways To Thoughtfully Prepare Your Finances For A Recession” The Good Trade, https://www.thegoodtrade.com/features/recession-preparation-tips,
- Kunal, “7 Ways To Prepare For A Personal Financial Crisis” Indian Youth http://www.indianyouth.net/7-ways-to-prepare-for-a-personal-financial-crisis/,