We are living in uncertain times and a situation can arise where in the economy has suddenly taken a down turn and a recession has set in. This can result in unexpected job cuts and layoffs. A sudden decrease or stop in your expected income can lead to a crisis situation at home. In order to prevent this from happening we may need to change the way we look at our finances and come up with a robust plan of action.
So here are some tips that can help you save money in tough times:
1. Plan a budget for your family immediately.
The first and foremost thing to do is to take stock of your financial situation. It is prudent to have a complete understanding of your savings in different categories (e.g) Children’s education, food, entertainment, retirement fund etc.
2. Do do not indulge in impulsive buying.
Categorize your expenses into different categories like
- Can wait
- Not needed at all
Once you’ve been able to answer these questions, then you can plan your shopping list for the month. Stick to your shopping list and the budget allocated to it. Any additional purchase should be strongly discouraged unless you are absolutely convinced about its need in the current scenario.
3. Start with small steps towards saving.
If your family has been eating out quite often, then you may need to curtail it. Also entertainment and credit card expenses need to be brought down. Inculcate the habit of being a responsible shopper rather than an impulsive one (smart consumerism).
After my marriage, the first thing we did as a couple was to pay off our credit card debts. We decided not to have more than 1 to 2 credit cards and also resort to the same as a last alternative. The result has been great as 15 years later our credit card transactions have been negligible.
The rule is simple:
Do not buy what you cannot afford.
4. Consolidate your Mortgage payment.
During times of a recession being without a job can be terrible thing. That said, this is something that we really need to work on in good times. Save up and try to prepay your loans as early as possible. Prepayment of loans helps save a lot of money. Be sure to make a note of everything: from the term of the loan to the interest rate and penalties. The more the years of interest payment, the more money you will be paying the banks.
5. Look for second source of income.
Always look for alternative income streams if you are in a recession hit industry. For e.g. freelancing, part time jobs or converting your hobbies into a revenue generation tool or offering paid services to friends and family (like help in filing returns, tutoring a child, running errands for them, senior citizen care or attending a doctor’s appointment with them . Though it may be difficult in the beginning, once you have tried these areas, you will always have a second income to bank on in the future.
A Bonus Tip
6. Recycle and Declutter .
Recycling doesn’t limit itself to old newspapers, glass bottles or tins. You can also recycle old clothes, household items, books ,electronics and more. One man’s rubbish is another man’s treasure. You can sell these on OLX, Quickr or other sites to make some additional money.
Finally everything depends upon your positive attitude to change your adversity into your gain.
Please read our other article Cooking on Budget.
Tags: frugal living, making money tips, money saving tips, Payoff mortgage, plan and budget, save