How to Manage Your Money During the Recession

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By rayhogan22
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Money

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:

Difficulty: Moderately Challenging

Instructions

Step 1

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.
Step 2

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 frivolities 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.
Step 3

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.
Step 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.
Step 5

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).
Step 6

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.
Step 7

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.

Comments

RobertRichford said

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on 5/29/2009 Great tips on How to Manage Your Money During the Recession.5*rec

renee82 said

on 3/30/2009 Thanks for sharing this article. I am starting to get more serious about finding different ways to earn money during this difficult time.

MotherDove said

on 3/25/2009 Yes, tighten your belt and buy what you can! This is definitely a buyer's market and you must strengthen your financial position to take advantage of it. Great advice. Thanks for this article.