Throughout history, the world economy has experienced its share of ups and downs. Economic instability can lead to a fair amount of anxiety for anyone at the best of times; these fears are exaggerated ten-fold during a pandemic. Here are a few tips on how you can assuage those fears and come out of the current pandemic calm and with your head above the water.
Managing Your Flow
The first thing you need to look at amid a pandemic is your cash flow and expenses. To start, make a list of what you owe and how much you owe. Having all your debts at the forefront will help you analyze your finances’ larger picture. The next step is to make a realistic spending plan, including phone bills, Internet bills, hydro bills, etc. Doing so will make it easier to determine your spending priorities and help you make the minimum payments.
Set up a separate savings account, as well as a spreadsheet to keep track of your money and help you see how far ahead or behind you are each month. It will also help you budget and know where you are spending and what expenses you can reduce or eliminate.
Emergency Back-Up Plan
As stated, you should set up a separate savings account as an emergency contingency plan should any unforeseen expenses arise. Without a proper savings strategy, you will quickly fall into severe debt.
Set both short-term and long-term savings goals. Eventually, you want to have enough saved up to cover about 3-6 months of living or business expenses. Doing this will set your mind at ease during an economic downturn when your cash-flow may be volatile. Your savings can help expand your business or help you perform any needed upgrades in brighter economic times. It’s a great idea to have multiple avenues to tap into when you’re facing lower customer returns or a budget crunch at home due to a market downturn.
Learning to manage your expenses takes patience, compromise, and discipline. Creating an emergency fund will convey these virtues and come out of the economic downturn no worse for wear, and maybe even ahead of where you expected yourself to be.
Sight Your Sources
Suppose you are looking for new income sources throughout the pandemic to tie you over until the economy stabilizes; in that case, there are plenty of resources available for businesses to utilize. Some enterprises have pivoted from their traditional stock to supplying much-needed supplies on low inventory throughout the coronavirus outbreak.
You could also turn to sell oversupplied stock that you have saved up throughout the years that is of no use to you at this point. You can even look towards other avenues for gaining revenue, such as sharing your skills and expertise with other businesses and people.
It would help if you looked back on any superfluous expenses you or your company are currently incurring. Whether it be a monthly Netflix account or your daily paper, cutting back on unneeded spending is a significant way to cut down on your bottom line and come out ahead in these tough economic times.
Another thing you should take a long hard look at is your investments. While the market has been volatile, you can still invest safely. For example, bonds are a good, secure investment that can provide you a safety cushion and help you earn money in the long run.
An essential step in avoiding economic stress is trying to lower your expenses. Choose low-cost products, hire temporary employees to handle menial work, or only do without supplying your workforce with pens and paper and moving to electronic communication channels. There are many ways you can lower your personal or company’s expense account without sacrificing production and service quality.
Start by making a list of all the products and services you or your company can’t do without, then make a list of all the less critical products or services that you can avoid for a while. Cutting out the fat in your company and streamlining things can help ensure you keep all the essential things that make you or your company unique while still providing you with avenues to save money.
With a new president in the White House, economists are shifting their outlook on the Canadian economy based on new policies that could increase its potential growth. There could also be significant downturns in current tariffs, leading to more economic stability. The coronavirus vaccine launches should help pave the way for businesses to manage the market’s uncertainty.
Joshua J. Cooper | Contributing Writer