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The last recession brought most of us to our knees because we were basically left to fend for ourselves. With the government struggling with the economy in general, we all had a difficult time getting help for our personal financial crisis.
It seems that a similar event could happen again. On October 1, the government shutdown some of its operations because the House and Senate could not agree on their funding. With no funding, they have nothing to spend to make operations possible. The solution is to shutdown the government.
But what does that mean exactly? And more importantly, what does this mean for the average American? Here is a video released by CNN about the government shutdown - at least, it was filmed before it happened. It shows interviews from citizens and foreigners alike to reveal what the public has to say about the upcoming shutdown.
With the recent government shutdown, people are having mixed reactions. Some are suddenly in fear that another financial crisis could be looming ahead. Some are confident that we will pass this unscathed. After all, this is not the first time that it happened and the nation is still around to tell the tale about it.
One thing is for sure though, personal finance management is necessary more than ever.
6 tips to help shield you from an economic crisis
Its not like you are being a pessimist or anything. However, you can never go wrong by being overly prepared for a financial crisis. Unless you want to go through another devastating phase in your life, you may want to learn from your mistakes in the past and wise up.
Here are 6 tips that we suggest you should start doing just in case things turn for the worse.
Keep your eyes and ears open. As much as you want to keep your attention inside your happy family bubble, you need to start paying attention to what is going on around you. At least, if you haven’t done so already. Watch the news and surf online for the latest news. Read the papers too if that is still something that you do. Even if your business is not directly affected by the affairs of the government, as a citizen, you need to make yourself aware. If events similar to the government shutdown drags on, you could find yourself in some deep trouble.
Create a frugal budget. Another preparation that you need to look into is your frugal budget. This is probably the best tool that will help you survive a crisis. If you feel up to it, you can ask the whole family to start implementing your frugal budget - at least, until the “event” is over. Whether it results in a crisis or not, you will still gain a growth in your savings. In case it does get worse, you won’t have a hard time transitioning like the rest of the nation. We found a bare bones budget worksheet from About.com that you can pattern your frugal budget on.
Check on your savings. It is time for you to start looking into your savings to gauge if it can tide you over another crisis. In case it is still lacking, you might want to prioritize it before things progress negatively.
Look for other sources or income. If you haven’t worked on it yet, you have to start looking for other sources of income - in case something happens to your day job. Search for online jobs or put up a passive income business. You can clean up your garage and convert it into a studio apartment and have it rented. Anything that will get you to earn money aside from your current job.
Stay away from purchases. This is especially true for expensive purchases. It is not wise to buy a home or a new car at the moment. Put it on hold so you have extra money to spare.
Avoid more debt. If you planned to make the purchase through credit, that is all the more reason not to push through with it. You don’t want to waste your limited resources on interest - considering what is happening around you. In case you are still burdened with debt, it may be best to continue paying them off while keeping a close eye on your savings. Do not use your savings to pay it off. That is not really a good idea at the moment.
The key to survive any financial problem
If you notice, the key to survive any financial crisis is simply to be prepared for it. Sometimes, a bit of paranoia is also necessary. You want to make sure that you are ready just in case. If nothing happens, then there is no harm done. You can just put that aside to add to your savings or you can use half of it to spend on something that you wanted to have.
It is very important to build up your emergency fund - just in case there is something that you have to spend on. Whether the crisis is personal or on a national scale, there is nothing wrong to prepare for any event that could turn your life around. If you have to give up your work, you know that you are capable of doing that. You will not be tied down by a necessary expense that you have to finance. At the very least, an emergency fund that is not spent can be added to your retirement fund. That should enable you to retire early.