How to Survive a Financial Crisis

We would all like to be prepared when a financial crisis occurs and if you’re smart you will take the necessary precautions ahead of time. Keeping track of how you’re spending your money and building a safety net of savings is key. Unfortunately, not everyone is proactive with their financial security. Problems can arise quickly and these stressing times can come down hard on your income, savings and interest.

I currently live in a state with the highest unemployment rate it has seen in decades. Being one of the recently laid off, I have had to make changes. Some subtle and some more bold. Evaluating my expenses was my first step. I have always kept records of my expenses, knowing at all times where my money goes month to month. This has made it much easier for me to weed out any unnecessary spending and consider where I could be more cautious. Knowing how much is spent each month on mortgage, rent, utilities, credit card debt, food, gas, clothing and other needs will put things into perspective and will allow you to create some financial balance. Eliminating one expense will enable you to take care of other more important expenses.

How does one eliminate an expense? Well, this may mean you need to cut down on luxury items and extracurricular activities. However, you don’t need to cut them out of your life completely. Just consider alternatives, whether you buy a less expensive brand or find some way of continuing your hobbies on a limited budget. For example, instead of paying for a gym membership, work out at home, at the beach or at a local park with a friend. Try car pooling with co-workers to cut down on gas. Shop off the clearance racks instead of the full priced garments or exchange clothes with family and friends. Don’t forget to cut coupons for groceries and try to find less expensive foods at all for a dollar stores. Also, keep dining out for special occasions. Food, drinks and gratuity all add up at the end of the evening and one night out could be exchanged for multiple, less costly activities. Remember, the smallest eliminations, when put together, can make a difference between getting though these tough times and being a casualty of them.

Also consider ways of trimming your utilities. Turn off lights or the TV when you leave a room. Unplug unnecessary electronics to conserve energy. Make sure your home is properly insulated to keep warm in the winter and cool in the summer. Be self aware and catch yourself when you are being wasteful.

If you have some cash to spare, be sure you have it in a secure CD with a good interest rate or if you don’t want your funds held up, try a money market account. Check the interest rates periodically to ensure you are making the most with your savings.

A financial crisis can be devastating. Be prepared so it is less stressful. Know your expenditures, be conservative with your spending and have a safety net. Keep your resume up to date and know your skills. Work together with family and friends to create a supportive network for each other.