By all measures, it has been a bad month for the American economy. Whether or not we’re about to enter a deep full-scale recession — or possibly even a depression — isn’t quite clear yet. However, it’s fairly obvious that the coronavirus pandemic has had a significant impact on the monetary outlook of virtually every person on the planet. Given that fact, it’s important for business owners, investors, entrepreneurs, and professionals in all walks of life to understand how to manage their finances during an economic downturn. Thankfully, there are proven ways to help you do exactly that. Here are four of the most basic ones:
One of the hardest things to do during a recession is to remain calm. After all, no one likes to see the stock market plummet, interest rates hitting near zero, or a spike in unemployment. Yet, individuals who manage their finances successfully know not to panic during trying times just as they don’t get ahead of themselves in bull markets. Resist the urge to empty your 401k or pull all of your savings out of the bank. Doing so will only make your personal financial situation worse.
Prioritize Your Purchases
An “essential purchase” under normal circumstances and an essential purchase during a recession are two different things. Individuals and businesses alike need to take a hard look in the mirror and decide what products or services they need to invest in, and what they can let slide. Business owners can create a priority list that includes important items like point of sale solution software or a new VoIP phone system. Similarly, individuals should cut out frivolous purchases and focus on issues that are most pressing in the short term.
Crisis is just another word for “opportunity.” The reality is that some businesses end up thriving during a recession. Individuals should look for new ways to invest their money. And business owners should strive to provide new and better services to accommodate customers in a new economic environment. Doing what you’ve always done during a recession isn’t like to pay off; so be willing to change things up and take a few chances.
Recessions and depressions affect everyone. Yes, people have a responsibility to look after their own well-being first and foremost. Still, those who are lucky enough to avoid catastrophe during a recession have a societal obligation to give to others who weren’t so lucky. Consider donating to charitable organizations that provide food and shelter for the less-fortunate in your community. Or, patronize a local business that may have struggled during the recession. Even small acts of kindness and generosity can go a long way!
Photo Credit: Dorothea Lange