How To Survive The Global Economic Crisis: 5 Tips To Ride Out The Raging Storm
The world is going through a global economic crisis. How do you survive the raging global inflation and prosper?
A recent article published in Trading economics showed that the US Core inflation rate had unexpectedly risen to 8.6 percent by May 2022. This was the most significant increase in inflation since 1981.
The article gave a breakdown of the significant increases in household goods and services that were likely to make a substantial impact on the cost of living:
- Energy prices rose by 34.6% due to an increase in gasoline (48.6%), natural gas (30.2%), electricity (12%), and fuel oil (106.7%)
- Food costs increased with significant increases in the prices of meats, poultry, fish, and eggs (14.2 %)
- Other increases were seen in airfares (37.8%), shelter (5.5%), and used cars (16.1%)
The article summarized that your wallet would take a hit from inflation and economic crisis. In other words, your income from last year may not cover your bills and household needs this year.
For example, if you spent $100 filling up your truck last year, you would need to pay $134.10 to fill up the same truck this year. A whole chicken that used to cost $10 last year will cost you $14 to buy this year.
Many households will be affected by the raging inflation at our doorstep. A few families may go under because of this economic crisis. A few will weather the flood of financial pain. And a few households will prosper despite the inflation.
I want my family, friends, and members of The Investing Mindset to survive the economic crisis and become stronger and more prosperous.
This article is for you if you want to survive and prosper in the coming global economic crisis.
Charles Dickens, one of the greatest playwrights ever, once wrote about the economic crisis in his book A Tale of Two Cities with this often quoted phrase.
It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.
The moral of Dickens’ quote is that in times of economic crisis, you would have many feelings that may make you, in some situations, do foolish things. Or you could make wise decisions that will get you out of the financial hell you face.
The bottom line about how you survive the present economic crisis is down to you. Your financial status is like a ship going through a storm, and you are the captain at the boat’s helm.
The bottom line about how you survive the present economic crisis is down to you. Your financial status is like a ship going through a storm, and you are the captain at the boat’s helm.
How would you fare in your duties as captain of your finances during the storm? Would you run your ship aground and sink? Or would you ride the storm and arrive at the port of prosperity?
When a ship is about to set sail, certain things must be done to ensure the ship sails smoothly and arrives safely. Just as you would secure a seaworthy boat before you set sail, you must also ensure that your finances are in proper shape in an economic crisis.
Here are some tips that will allow you to survive in the present global financial crisis:
Assess Your Financial Status
You need to assess whether you are struggling or will be able to manage financially no matter the interest rates or price increases you are dealing with. Ask yourself the following questions:
Am I able to pay my mortgage, rental, and energy bills?
Do I have savings for emergencies or unemployment for a few weeks?
The whole point of this exercise is not to scare you. Instead, it is for you to face the reality of your financial status.
Having a realistic idea of your finances allows you to take the necessary steps to deal with problems before it is too late to handle them.
The outcome of your financial situation will help you move on to the next step.
The next thing you must do is know your net worth.
Your net worth is your assets minus your liabilities. Negative net worth means you have more liabilities than assets. You need to find out why and how to fix the problem.
Positive net worth means you have more assets than liabilities. Then you should work towards keeping and increasing your net worth.
If you are clueless about how to assess your net worth, you can check out personal financial calculators on Mint. The website has many free apps to help you navigate and calculate your net worth.
Spend Money On Your Needs And Decrease Your Wants
Most of what we spend our money on is our wants instead of our needs. Our basic needs are essential for day-to-day living, including food, shelter, clothing, healthcare, and transportation.
For example, rent, groceries, electricity, health, and auto insurance are needed.
On the other hand, spending on movies, eating out, holidays and vacations are wants.
In an economic crisis, you should spend more on your needs and reduce your spending on desires until your finances improve.
Look For Ways To Increase Your Income
Remember that inflation is the greatest threat to your purchasing power and savings.
The best way to beat inflation is to earn more income to support or boost your purchasing power. The best way to beat inflation is to either get a pay raise at your present job or earn income from another source. You can earn revenue from a second job or start a side business.
I usually recommend starting a side business because appropriately done; you can build wealth and never have to worry about money for the rest of your life.
Develop The Habit Of Saving
Bill Staton, money coach and author of the best-selling program, How to become financially free on $50 a month, describes the importance of savings with the words “Savings equals Investment”.
In other words, when you develop the habit of saving a part of your income, you are less likely to have financial difficulties.
Why? Because the individuals who learn to keep more are more likely to manage their money better in an economic crisis.
Have Faith That The Economic Crisis Will Get Better
No condition is permanent. There will always be times of economic boom and bust. What you are now facing is not permanent. Winston Churchill said, “If you are going through hell, keep going.” The moral of Churchill’s quote is do not allow an economic crisis to stop you from living your life.
“Every great man, every successful man, no matter what the field of endeavor, has known the magic that lies in these words: every adversity has the seed of an equivalent or greater benefit.”
The moral of what Clement Stone is saying is that making mistakes is not bad… They are great opportunities to become a better person.
In conclusion, you should not be afraid of the word “mistake” because it’s neutral unless you add emotion to it. So, if you say you’ve made mistakes, it doesn’t mean you’re wrong or should feel bad. Instead, see mistakes as opportunities to learn from and improve next time.
Here’s to doing better!
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