5 Ways to Survive Tough Economic Times

As the media highlights the sharp rise in unemployment and the harsh economic conditions, it triggers intense emotions and feelings of doubt among many.

Individuals often adjust effectively to significant changes and stressful circumstances over time. 

What enables certain individuals to recover from these challenges while others remain burdened by them? The answer lies in resilience, the ability to adapt successfully during tough times. This crucial skill, which can be developed, plays a key role in navigating the present difficulties and potential issues in relationships, family, or work that may arise later on. Here are five ways to survive tough economic times and build resilience.

Assess Your Financial Situation

Understanding your financial position is crucial for making knowledgeable choices and strategizing effectively. A certified public accountant (CPA) can assist in determining essential financial metrics, such as the duration your business can sustain operations without any new income.

Create revenue forecasts grounded in realism for the immediate and distant future. These forecasts should account for only the funding that is likely to be secured, given the present conditions; avoid relying on past revenue trends to make these estimations.

Make Your Spending a Priority

Nonprofits typically are vigilant about their financial management, and this careful monitoring should persist. Reducing expenses might be necessary but should be done thoughtfully, instead of applying blanket cuts to all types of spending.

Do not limit considerations to the immediate financial relief that cuts may bring. The effect of each expenditure should also be evaluated. Wherever possible, efforts should be made to protect the budget for those programs and services currently delivering the most significant benefit, shifting resources away from initiatives with lesser impact or those yet to be fully developed if needed.

Concentrate on Clearing Your Debt if Possible

Concerns about settling outstanding debts such as credit card charges, utility bills, or student loans might loom if you anticipate a dip in income. In such scenarios, deciding which bills are essential becomes a priority since a decreased income could mean skipping payments on some obligations. A drop in income can lead to difficulties in paying all your bills promptly and fully each month, negatively affecting your credit scores.

• Under normal circumstances, protecting your credit scores is crucial. However, during financial hardships like a recession, this may not always be feasible. The key is strategizing your bill payments to ensure your limited funds stretch to cover as much debt as possible.

• Prioritizing your housing payments is critical. You certainly don't want to risk eviction or foreclosure. Similarly, keeping up with car payments is essential, particularly if your vehicle is necessary for commuting to work.

• If you have reduced income, contact your student loan provider to inquire about hardship relief options that may allow you a grace period without payments.

Address your medical bills once other key debts have been managed. Maintain your health insurance coverage by paying premiums on time. Whether through an employer or a personal plan. This prevents the policy from being canceled. If you lag behind on payments, communicate with My Canada Payday to explore options for relief.

Prepare for Unexpected Events

When the economy takes a downturn, our employment and earnings could be at risk. Allocate some funds for emergency situations. An emergency fund is money you've saved to help you manage financially during challenging times.

An emergency savings account allows you to navigate through economic downturns intact. This is crucial whether you find yourself unemployed, your business isn't generating revenue, or if you've encountered poor financial choices.

Aim to save diligently to prepare for unforeseen financial hardships in a struggling economy. At a minimum, accumulate three to six months' worth of income. Ideally, for greater security during periods of job market instability, strive to save eight to twelve months' worth of living expenses.

Maintain a Lifestyle that Fits Your Budget

To navigate financial stability and adhere to a budget within the constraints of a difficult economic landscape, make a conscious effort to diminish your outgoings, augmenting your capacity for savings. 

Achieving this requires a disciplined approach to budget management, emphasizing the acquisition of only essential goods. In the face of the prevailing economic conditions, there’s no need to indulge in unnecessary purchases.

Minimizing your expenses can bolster your savings and facilitate a smoother transition to a more economical lifestyle. This is in anticipation of or response to economic adversities such as recessions. 

The adoption of a frugal lifestyle, does not equate to a renunciation of enjoyable experiences. Rather, it entails judicious financial decision-making that seeks to lessen financial outflows without significantly impinging upon your standard of living.

Calibrate your expense reduction efforts to ensure they aren’t unsustainable over the long term. Navigating through periods of economic contraction effectively hinges on cultivating the ability to sustain oneself with fewer resources.

Endnote

Any effort you make to streamline your finances will pay off in the upcoming months and years. Equipping yourself for a recession can ease your worries in the face of economic difficulties, while also ensuring you're better positioned to enjoy the prosperous periods.