The past few years have been very rough for the economy with the decrease in the value of the American dollar, the increase in unemployment, and the credit/debt crisis. With the recent instability of foreign countries due to political uproar, we may once again, face an unstable American economy.
People have lost their jobs, their homes, in some cases their families, and all of their possessions due to an overwhelming amount of debt and lack of income to repay those debts. It is said that our true colours shine brightest during a time of darkness; if we have financially survived the past few years I think we deserve a shiny gold metal.
We can look at the recent recession as a financial survival of the fittest where only the strongest have survived. We should learn from our past experiences; therefore next time the market and our economy crash, which may be sooner than later, we will know how to react. More importantly we will know how to be prepared.
If you have suffered a loss of income like I have over the past few years, you have made some adjustments to your living and spending habits. I have learned to live on less; not only because my income has decreased, but because I realized that I took money for granted. I thought my money, and more importantly my income, would always be steady and stable. However, I have learned in the last two years that this is not true. I now earn less than I did in 2007 and 2008, but I save more. I don’t spend as much as I used to because I have learned that material goods don’t matter that much, and money really cannot buy happiness.
Have you changed your spending habits to survive?
If you lost your home, will you now be a lifetime renter? If you lost your savings, will you now invest in low risk investments? I used to think that money was the key to my personal and financial happiness; I have learned this is also not true. Good budgeting and self worth are now my financial priorities. My disposable income is less than it was in 2008, but I am a lot happier. I have realized that money is not guaranteed. Therefore, the next time the market crashes I will know what to expect, and how to react. Although we can never be fully prepared, we can take precautions to make the transition less of a shock.
Saving more in my non registered savings account is another adjustment that I have made since the recession. I still invest for my retirement, but I am no longer obsessed with maxing out my retirement savings plans each and every year.
Will you be able to financially survive another recession?
DINKS Financial Survival Guide:
- Save Save Save. Whether you save for retirement or you save in a non registered investment account, it doesn’t matter…Just Save. Spend less and save more. It is important to create a nice financial cushion of money in case you find yourself without income or less income in the future. If you don’t need it to keep warm or keep your belly full then don’t spend money on it. Pay your bills and be happy that you have a mortgage payment to make and a grocery bill to charge…not everyone does.
- Be prepared with a backup income. In case you lose your job it is important to have a secondary source of income such as a side hustle. It is always good to have options available instead of having all of your income eggs in one basket.
- Don’t Live Beyond Your Means. If a lot of your monthly income goes towards debt repayment I suggest that you start to live on a cash budget. Pay with cash first, and use your credit card as a secondary payment option. This way we will not ruin our credit history if we can’t meet our debt repayment obligations.
Photo By BaronBrian
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