Monday, October 29, 2012

How To Survive During An Economic Downturn

As tough as it may sound, economic downturns are one of the hard facts of life and are considered as part of the flow and ebb of a country's economy. There are many factors which bring about economic-recession but whatever the underlying cause might be, the ripple effect caused by the drawback of an economy is far reaching and usually affects a majority of individuals in any given country. In view of this, it is mandatory that an individual should take drastic measures to survive this bleak economic period. The following are some tips on how to survive during an economic downturn

Plan Ahead

This is considered as one of the best strategies when it comes to surviving an economic downturn. In order to shield yourself from the diverse effects associated with economical downturns, you should set up proper strategies specifically aimed at counteracting the financial difficulties experienced during this period. Setting up an emergency savings account is one of the ways to go about doing this.

Avoid Bad Debt

There are two types of debts; good debts and debts. Good debts are debts incurred on basic utility bills usually in form of electricity, rent, water and gas bills. In order to live a comfortable life, an individual has no choice but to spend money on such utilities. On the other hand, bad debt refers to utility bills on items or luxuries that an individual can live without; these include club subscriptions and pay-TV.

In order to survive economic recession, bad debt should be avoided at all cost. This means that, an individual has to forfeit unnecessary luxuries that would only drive up the cost of living.

Use Debit Cards Instead Of Credit Cards

The use of credit cards during an economic downturn is one of the biggest mistakes an individual can make. By using a credit card, you are actually spending money that you do not have. In an attempt to continue living the life they were living before the downturn, most individuals end up accumulating huge balances on their credit cards. Debit cards are different from credit cards in that, the money is taken directly from a bank account and there is no interest incurred during its use.
The use of a debit card makes an individual aware of their spending limits and also shields an individual from the high interest rates associated with the use of credit cards. By doing this, an individual has a higher chance of surviving during an economic downturn.

Pay Down Debt

During economic downturns, it is usually advisable to pay down debts such as credit card debts. Increasing credit card payments even by a small margin will help you save a lot of money in the long run and is also instrumental in helping an individual come out of an economic crunch unscathed.

Cook at home

You can save up more by cooking at home as opposed to eating out. When doing this, it is usually advisable to buy packaged food in bulk in order to save more money.

Use public transport

Transport expenditure can be cut down extensively through the use of public transport. In order to further subsidize transport expenses, an individual can walk or cycle to a given location.
By doing this, an individual is assured of surviving an economic downturn in relative comfort.

Author Bio: Blogger who talks about all things finance for 

No comments:

Post a Comment