With America in the midst of the worst economic crisis in decades, there has never been a better time to assess your current financial situation and prepare yourself in the event you lose your job. The following steps will help you rise above the recession and take control of your finances in no time.
Live on half. Whether you are in a single or double-income household, cut all living expenses in half and put the rest in the bank. Go through all expenses now, while you’re still employed, and find ways to cut back. Do not wait until you lose your job to change your spending habits. In today’s economy, it could take from six months up to one year to find another job if you are laid off. Prepare yourself now and learn how to live on one salary so that you don’t dip into savings or retirement accounts, should you lose your job. Some ways to save include:
Cut your cell phone plan to the bare minimum-get rid of texting, picture messaging and internet capabilities. These features are pricey and unecessary.
Slash your electric bills by turning down your thermostat while you are at work. Turning your heat down three degrees can save you 10% on your next electric bill.
Cancel your newspaper delivery and read the news online.
Switch your cable to the basic plan.
Pay with cash. If you turn to your credit cards for every purchase you make, it’s time to pay for everything in cash, instead. You are less likely to purchase something if you have to actually fork over the bills in order to pay for it. As credit card companies close accounts with zero balances, reduce credit limits and increase interest rates, it is becoming increasingly difficult to use them with out paying a hefty price. Getting in the habit of paying with cash will prevent you from panicking when your account is suddenly closed or your limit reduced.
Only buy what you truly need. Buy only the necessities and don’t blow your money on excesses. Take a thorough inventory of your spending habits by saving every receipt of every purchase, right down to that pack of gum, to ensure you are only buying what you need to survive. Sometimes you don’t realize just how much you’re spending until you sit down and add it all up. Use the money you save to pay bills and stash the rest in your savings account.
Make a budget and set goals. In order to stay on track during adverse economic conditions, you must adopt a solid financial plan and stick to it. Create a budget that places limits on your spending and forces you to keep track of where your money goes.
