An economic crisis is a situation that can be very difficult to deal with. In addition, when it occurs, it is inevitable to try to avoid it, since it tends to affect in one way or another all sectors of those societies in which it develops.
The good news is that it doesn’t necessarily have to spell catastrophe for your quality of life. With adequate financial education and intelligent management of your resources, you can not only significantly reduce the impact of the crisis on your economy, but you can also create the possibility of coming out stronger when the crisis ends.
What to do during an economic crisis?
The first thing you should be clear about is that there is no magic formula for what to do in a situation of economic crisis. The actions to take will depend greatly on your financial situation . Therefore, you should not feel obligated to carry out each of the recommendations that are going to be mentioned.
The ideal is that you first analyze what your financial status is and with the data you obtain, decide what is the best strategy that you can adopt . In addition, at all times you must be clear that the objective is not to become a multimillionaire, but to reduce the impact of the crisis on your economy as much as possible.
This is because the economic strategies to be used in an environment of prosperity may be different and even applying those of a crisis in such situations could be counterproductive.
Organize your monthly budget
The basis of all good management of the economy is found in planning . If you know exactly how much money you will have each month, you can determine approximately how long it will take to save a certain amount of capital or if, on the contrary, you are spending more money than you should.
A good strategy is to divide your monthly expenses into percentages. Most of it should be allocated to essential expenses, for example, food expenses, apartment rental, transportation expenses, among others. Next, you must allocate a percentage to your savings fund, which should aim to collect a sufficient amount of money to invest it.
Finally, the smallest part of the monthly budget should be left free for leisure expenses . In this case, it is necessary to have some discipline, since it can be tempting to make the percentage of money destined for leisure be higher, but it is very important not to give in to temptation, since these expenses are usually the most serious during an economic crisis and many times they can make the difference between increasing your purchasing power in the future or leaving you financially stagnant.
Take advantage of stores of value
In those situations of economic crisis where inflation is present, it is not a good idea to save. In fact, it could be disastrous for your economy, since inflation causes your money to lose purchasing power without you doing anything about it.
Fortunately, reserves of value allow anyone with financial education to protect themselves from inflation. Precious metals such as silver and mainly gold have been used throughout the history of Humanity as refuges of value when financial crises occur.
This is because they are scarce assets whose value, far from being negatively affected by financial crises, tends to increase when they occur .
However, in modern times gold is not the only store of value asset available. Lately, the use of Bitcoin as a store of value has become very popular, because it has been the asset with the best financial performance in the last decade.
Therefore, it can be a good alternative to gold. However, you should keep in mind that cryptocurrencies, although they tend to offer better long-term financial returns than gold, also carry a greater amount of risk, so you should carefully consider what is the best store of value according to your needs. personal situation.
Generally, the higher your capital, the higher the risk you should be able to take .
Be careful with the expenses ant
Those expenses that are usually very small are called ant expenses, so they are not given much importance. At first, it may seem that the ant expenses do not represent a significant loss of money, since they are usually minimal .
However, the problem with these types of expenses is that they tend to be cumulative. In the short term, you may not see the damage they are capable of doing to your economy, but in the long and medium term, yes. In addition, these expenses have the drawback that they are usually due to unnecessary things .
One of the most common ant expenses is spending money on eating out. Occasionally and with good planning, it should not be a problem for your economy, but when it is done very frequently, it is. In this case, the solution could be as simple as starting to cook at home.
The key is not to eliminate these expenses completely, but to avoid them as much as possible, so that savings are maximized.
make investments
Investments are probably the most important point when it comes to financial freedom. The ideal is to have made a good number of investments before having entered a financial crisis, but this is not always possible. Now, investing during a crisis is certainly better than never investing at all.
The investment options today are quite varied and each one should be studied meticulously. For example, with the support of a broker, you can buy shares of a company that is listed on the stock exchange and you consider that it has enough potential for the value of its shares to increase considerably over time.
These types of investments are usually easily accessible and, depending on which company you select, can carry low risk. The only drawback is that if you don’t invest considerable capital, it will be more difficult for you to obtain a good return on investment .
On the other hand, these are long-term investments. Ideally, you should wait at least a year before considering selling the purchased shares to recoup your investment.
Another option similar to this is to opt for an investment fund. It usually offers higher yields and the level of risk that is managed is similar, although the return on investment time is also usually long.
A third option is to invest in altcoins. These are alternative cryptocurrencies to Bitcoin that, although they do not guarantee that they can function as good stores of value, can sometimes rise significantly, reaching gains of up to three figures in relatively short times .
The problem with this last investment option is that, although it can offer higher returns, the risks it represents are also higher . Therefore, it is essential that the money you invest is not destined for mandatory expenses, for example, the money to buy food for the month.
Because all investments carry risk , the ideal is to invest only the money that has been saved after months of correct financial planning following all the recommendations mentioned above.