Take Control of Your Finances in Difficult Economic Times

submitted by Fordyono Sukamto, Senior Account Executive

So what do you do when you are facing difficult times with your finances during a crisis like the current one: The Global Economic Crisis? Well, we all know that many people will experience negative side effects of the current economic downturn as people are losing jobs due to the volatility of large corporations unable to sustain the impact of the economy meltdown and global stock exchanges being hugely affected by the sort of bailout plans the US has passed to rectify the situation, with nail biting fear of another ‘Great Depression’. It is no wonder both nations and people around the world are feeling a dash of trauma by what is going around presently.
Moreover, the psychological effect is emotional distress due to a perceived loss of control. When the financial news is grim and market indices fluctuate hundreds of points daily, it is really easy to feel that you are helplessly at the mercy of external forces. Some research has found that people are especially unhappy in situations where they perceive themselves to have a lack control. Therefore, it is no surprise that commuting ranks high on the list of things that make people most unhappy. Commuters never know from day to day what traffic gridlock, accidents, and weather they’ll encounter.

The good news is that there are ways to maintain control in times of economic uncertainty. I have researched around and found a list of many things you could do to maintain or get control over your finances and distract yourself during this crisis:

1. Watch Your Spending – The first and foremost thing to do is to watch how you spend. As economic uncertainty would mean the unexpected, such as facing sudden job layoffs or salary cuts, hence, it would be wise to start off early and prepare for what is to come, meaning to say “live below your means” and practice what economists call “precautionary savings.” The KEY is to spend on what you “need” rather than spend on what you “want”.
2. Prepare a Spending Plan – Preparing a budget or a spending plan would massively help you to forecast your future and current expenditure without having to spend or purchase the unnecessary blindly. It helps as a written “best estimate” of the cost of future spending and saving. Ideally, a spending plan should balance income and expenses, including regular savings for future financial goals. A worksheet is usually used to create a spending plan and there are many ready-made templates you can download through the internet.
3. Distract yourself – The best solution for not spending money is to stop thinking about it altogether. Naturally, this is easier said than done, but if you’re serious about keeping your money where it belongs, make an effort to pick up some activities you could do to distract yourself: sports activities or hobbies or do something you tend to enjoy doing that does not necessary break the bank.
4. Make more friends – You might not truly realise this but socialising and hanging around with groups of people, through talking and sharing thoughts and ideas, would greatly ease some forms of distress and provide comfort. Join some social group events and activities to broaden your social network, you might eventually benefit from an idea or concept for a small business opportunity.
5. Dealing with the crisis without feeling like it’s a crisis – The global financial crisis is only part of a common and natural cycle. It is just like when you are having flu, but this flu is present around the globe. Therefore, we shouldn’t get carried away with the frightful discussions. It all depends on how we respond it. Never panic when hearing bad news from the mass media. Get rid of the feeling of being afraid of becoming poor. Always have positive thinking, just like a kid when they are cheering and screaming for joy in the rain. This crisis will pass over, for sure.
6. Taking Care of Your Health – The last thing that someone needs in an uncertain economy is health problems, especially if your job (and access to health insurance) is shaky. Major health “issues” such as diabetes and cancer, are expensive to treat and a drain on household wealth. Put the odds in your favour by taking charge of your health. Specific actions such as losing weight, exercising regularly, and quitting smoking provide many associated financial benefits. Health is, indeed, the greatest wealth.

The economy and financial markets can seem out of control today, nonetheless the best remedy for economic uncertainty is controlling things that we can. Numerous studies have confirmed that people who maintain some measure of control over their lives in times of crisis and uncertainty generally cope better and feel less powerless than those who don’t. Making plans, and revising them when needed, is also a characteristic of financially savvy people. Abraham Lincoln once said “The best way to predict the future is to create it.”