Facing a period of financial crisis can lead to feelings like fear, insecurity and instability, and these are enough to destabilize a family. The possible recession, inflation in the price of essential goods and the fear of losing the lifestyle we are used to, can generate panic among families. However, there are ways to prepare in time and thus prevent and minimize damage to your family budget.
Start by updating your CV
a good shape, although it’s not very obviousto prepare for a financial crisis is to update your curriculum vitae (CV). Financial turmoil can lead to increases in unemployment and even salary reductions. Therefore, it is important to be prepared for the eventuality of needing to look for a job. So, take some time to update your CV. Check the fields you can reinforce, update your professional experience and consider carrying out some kind of professional enrichment. In this last field, you can choose to take training courses that may benefit and enhance you, workshops or certifications. If you are considering going back to school or doing some kind of postgraduate study, this might be the time to consider it. Enriching your training can be very beneficial in the face of a job search situation, in addition to showing concern about professional training, it also demonstrates proactivity. Read also: Why it is important to include volunteer activities in your curriculum
Minimize your expenses
Another way to prepare for a possible financial crisis is to reduce your expenses to the bare minimum. This tip is applicable in many situations and, even without being in a crisis situation, you should always ensure that your expenses are minimized. However, in times of greater financial pressure, it becomes even more important to ensure that you have the largest possible amount left at the end of the month. Start by analyzing all your expenses: from house bills, grocery expenses to variable expenses. Then see the ones you can reduce and the ones you can’t. For example, if you pay rent, this is a fixed and unalterable expense, so you shouldn’t focus too much on it. However, others such as grocery stores, electricity bills, water and internet and television services can always be minimized. The important thing is go through each expense and list actions you can take to decrease those expenses. For example, with regard to your electric bill, what can you do to reduce it? Avoid leaving lights on when you change rooms, avoid having televisions and computers in standby mode, use lower wattage lamps, among other strategies. If, on the other hand, you want to reduce what you spend on food every month, make a list of what you need before you go shopping, create budgets and stick to it. Avoid going shopping hungry. The strategies are several, however, the objective is the same: minimize expenses and maximize savings. Also read: Is it possible to make money from the crisis?
Boost your emergency fund
In times of crisis, you should also ensure that you maximize your savings. Nonetheless, you should not confuse savings with an emergency fund. These terms are different, as are their goals. It is important to have savings to cover certain expenses or to purchase something of greater value. On the contrary, an emergency fund, as its name implies, used to deal with unpredictable situations. What happens if you suddenly find yourself out of a job? Or if you have a major accident? Or if your income rises sharply? These situations do not normally come with a warning, however when they do entail large expenses. Try to have as much value as possible in your emergency fund. The ideal is to have an emergency fund that covers at least three months of your expenses. But for some experts, it is best to set aside a period equivalent to six months of spending fixed. However, remember that at these times these time intervals may not be enough. At a time of financial crisis, the more you can save the better, since it is a situation of great instability. Also read: How to deal with the post-pandemic crisis and recover your finances
Keep your investments
If you have investments, should not make hasty decisions. And at these times, fear can drive you to make decisions that can later harm you. First of all, you must take into account that, if you have long-term investments, you should not mess with them ahead of time. Second, you should never sell your assets at a time of failure. If, due to a financial crisis, the stock market crashes, don’t panic. Do not withdraw your investments at that time, as you will lose money. Let them stay and wait for the market to recover. Which will happen sooner or later, especially if we are talking about stable companies. Remember that investments should only be recovered when the market is growing and, if you are investing, you must do so for the long term.Also read: Investments: how to deal with market crashesWhen we talk about extra income there are several ways to achieve this. A simple way to get some extra cash is to sell items you no longer use. Clothes, shoes, books, pieces of furniture, any item that is ready to be sold and that you no longer need. If you have baby and toddler items that you no longer need, as your children have grown up, this is a great time to make them work. Currently, there are numerous online platforms that facilitate this process, such as the Vinted app, OLX, Facebook, among many others. Another way to get a extra income comes from freelancing. Take a hobby and use it in order to make money with it. For example, do you like to write? Why not be a text content creator for platforms? Do you like to read books? Why not start a youtube channel where you share your readings and opinions? There are several ways nowadays to turn a hobby into something profitable, just be creative. extra income comes from having a second job. This option is not always easy and feasible, especially if you already have a full-time job and you don’t have much time left over. However, there are opportunities for part-time employment and trying to fit into your usual schedule. Also read: How to earn extra income from your hobbies?
Start creating budgets
Last but not least, we have the budget creation. It is important to point out that budgets, by themselves, are not mandatory. Whenever you set a budget, you are making a deal with yourself.. That is, there will be no one to hold you accountable if you do not comply. So, it takes willpower. What are budgets? Budget are values that you assign to cacategories within the expenses you have. These can be daily, monthly or yearly, however the most common are monthly. For example, this month you just want to spend €200 on groceries. This is the value of your budget, that is, the value that you should strive to meet. To ensure that you comply, you can, for example, opt for white labels on certain items, or purchase seasonal items, or even reduce your meat and fish consumption. The measures to be taken must be defined by you in order to meet the stipulated budget. don’t forget that Budgets can be created for any type of expense: from grocery stores, to water and electricity bills, birthday gifts, parties, among many others. Also read: How to make the family budget when income is irregular?
A professional writer by day, a tech-nerd by night, with a love for all things money.