Do the current signs of The Great Depression have you worried? Are you thinking about ways to bullet-proof yourself before the financial crash? Here is what you need to know.
To start, you must understand the definition of 'economics' as it pertains to your own personal or business finances, and how you can use that knowledge to your advantage.
Don't even think about what the media says about 'economics' when they discuss the gyrations of the stock market, product shortages and demand increases, rising prices, mortgage foreclosures by the banks and the unemployment figures. Those are 'economic features' that guage an area much larger than you can personally control.
What you can control is your own personal and business economics. The meaning of the word economics I am using is the original one; meaning 'the art or science of managing a household or business.' And those are areas that you do have control over.
Managing a business or household is an art. It is necessary to have certain abilities and skills, such as putting in organization so things run better. There is a science of managing a business or household, especially in the area of money. Here is what you can do to ensure that the economics of your business or household are stable and strong, despite the fact the country's economy is headed on a downhill run towards disaster. 1 - Pay With CASH
Whenever you buy something using lines of credit or credit cards because you don't have the money to pay for it, you are committing your future income to the credit company. Those future earnings will be needed to pay your regular household or business operating expenses. That's when you end up in economic slavery known as the credit trap. An exception is buying property that increases in value, like investing in some commercial property or buying a second home that you use to increase your income from rents collected. Using your money to make more money is smart money management.
Tip: Be sure you negotiate a big discount when you pay with cash. When the economy is spiraling down and credit is harder to get, the guy who has the cash is the king. In addition, figure out how to buy items wholesale instead of retail to lower your cost even more.
2 - Keep Spending Levels UNDER Income Levels
Learn from your grandparents or parents who earned little, but lived very well. Keep expenses down to a rate that is less than your income. The quickest route to money disasters is spending more than what you earn. It's possible to maintain your quality of life while reducing optional spending. This can be achieved by acts such as buying used equipment rather than new, and eating less often in restaurants. Buy only based on absolute need instead of want! It's just a plain good money management practice.
3 - Money Must Be MADE Before It Gets Spent
When there is some large purchase you need to make in the future, begin by stashing small bits of money in a savings account for that purchase and don't stop until you can pay cash. On a personal level, if you have 10 years before your child enters college, then figure out how much the tuition costs will be and work out how much moneyyou have to sock away every week to have the full amount the year they graduate from high school. Plus turn in applications for every student financial aid package, scholarship and student grant you can find. On a business level, if you will need to upgrade or buy some equipment for your office , then figure out how much the cost of that will be and work out how much moneyyou have to set aside every week to have the full amount just before you will need to make that purchase. Plus search for every place you can find to get the biggest discount possible. 4 - Put Away Some Cash for Operating Expenses and Emergencies
You will sleep much better at night than the financial security of having some cash set aside in savings for emergencies like having to repair an office machine or get your car fixed, having to have some unexpected dental work or losing a job. When you have a cushion of cash you can immediately use, then magically, you stop worrying about money, and your focus returns to living life and enjoying it, and making money suddenly gets easier.
The one thing you have to be scared of in a great depression is not having some money set aside in a savings plan you can immediately get your hands on. Did you know that more millionaires were made during The Great Depression in the United States than during any other era in our history? How did that happen? In that time, the economy bottomed out, the stock market took an enormous dive, inflation took prices of everything through the roof, unemployment figures shot up like a rocket as companys shut down, and people who lost their jobs also lost their homes.
The people who had cash put away were able to acquire houses, land and whole companies for pennies on the dollar. They became overnight millionaires because they had the cash to survive the disaster called The Great Depression.
Out of every bit of income that comes in the door, immediately carve off 10% and put it in a savings account that you have designated for your cushion of cash. Perhaps you'll have to cut expenses AND work an extra job to build your cushion of cash. No moaning, groaning and saying you can't, JUST DO IT! As the days and weeks roll by you'll find you sleep better at night and are walking through life with greater confidence knowing you are controlling your financial destiny and have protected yourself from The Great Depression looming on the horizon.
Why is it vital for you to have enough control over the flow of your money? It is the energy and life blood of a household or company. It is necessary to pump some of it through the income generatingareas first to keep it running smoothly, and also to stash away some of it for future survival. Everything runs much more smoothly when adequatecash is available. Our Money Management Software guides you towards making the most advantageous decisions of how to use your income to make more money.
Article Source: http://www.orbitaloc.com/
Sandra Simmons, President of Money Management Solutions, has years of experience helping professionals and families manage their money to achieve their financial golas. To find out about the Money Management Software she created, watch the FREE 5-minute demo video on her website at www.MoneyMgmtSolutions.com
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