What To Focus On During An Economic Downturn
Are you feeling the heat of the economic downturn? With an increasing cost of living coupled with increasing interest rates and a sense of fear and anxiety constantly pushed at you from mainstream media it’s easy to feel overwhelmed and not know what to do.
But this is actually the perfect time to take control of your finances. In this post, I’m going to share with you some tips on what to focus on during an economic downturn.
First things first, let’s get down to the numbers. I know you may have some resistance to this, but it’s what’s going to set you free. Take a look at what money is flowing in and from where (your income) and what money is flowing out and to where (your expenses). This will create a huge level of awareness of where you are at financially. Look at whether or not your money is flowing in alignment with your values and if there are any leaks. Are you paying for things you no longer value or need? Are you earning and spending money in line with your values? My money management guide helps you track this.
Even more importantly though, focus on ways you can expand your income. Review what the market rate is for your role and see if you’re getting paid that, there may be an opportunity to ask for a raise. Are you able to do some freelance work or start an online business? Does your car sit on the street or in the driveway during the week? If so, can you rent it out on a site like turo, uber carshare or goget. Can you spend a few hours a week doing surveys? What education should you invest in to increase your earning capacity? There’s only so far you can cut expenses, expanding your income may seem more challenging but it’s going to have a far greater impact in the long run.
Another important step is to ensure you have an emergency fund. This is like having a safety net to catch you if you fall. How much depends on your situation and what’s going to make you feel more at ease over your situation. Make sure you have enough cash in the bank for unexpected emergencies but also ensure you’re not hoarding money out of fear that could be invested.
Be mindful of your relationship with money and how your money blocks are impacting your financial reality. We all have subconscious stories we’ve picked up throughout our lives which can keep us in a lack and scarcity mindset. You can read more about how to understand your money story here.
Now, let’s talk about debt. With such a significant change to interest rates, it’s important to review the rates you are paying and see if you can get a lower interest rate. Ensure you have factored paying down debt into your cashflow analysis, know the amount of your debt and when you will pay it off based on your current repayments.
Consider dollar-cost averaging (DCA) into shares. This means investing a fixed amount of money into the stock market via shares or exchange traded funds on a regular basis, regardless of whether the market is up or down. DCA is a great way to take advantage of the stock market’s long-term growth potential while minimising risk.
Be informed about the state of the economy and what’s going on in the world. Stay up-to-date on news and trends, but also remember, this too shall pass. Economic downturns are a part of the natural cycle of the economy. The key is to stay focused on your goals and keep moving forward.
So, there you have it, what to focus on during an economic downturn! It’s a great opportunity to take control of your finances and use this time to your advantage. If you want to stay up-to-date on all the latest tips and tricks, sign up for my newsletter here. Let’s slay this together!
