Mind & Body
Strategies for Surviving Tough Economic Times
4/1/2020 1:00:00 PM

Tough Economic Times

What a year it’s been, and we’re just a quarter of the way through. It’s been a rollercoaster of stress and worry. Not only worries about a global pandemic but the resulting impact on the economy. From the government’s standpoint, the best thing for consumers to do when the economy is in turmoil is to spend money. Consumer spending has a positive effect on all national economic indicators, but the same can’t necessarily be said about your personal economic indicators. 

"Basically, you should follow the same personal finance rules during an economic downturn as you do at other times, perhaps with an extra-cautious eye on what is going on with the economy,” says Karen Quinilty, Senior Vice President with Lakeside Bank. "It’s certainly not a good idea to panic and change the things you are doing right, but if you don’t feel you have a handle on your personal finances; its definitely time to examine your situation and get a plan in place.”  

Quinilty offers the following suggestions as a guide for maintaining a positive personal economic outlook regardless of what is going on nationally. 

Live within your means.
We all want those designer shoes, backyard pool, summer trip or sports car, but most people can’t afford all of these things. Quinilty says if you don’t follow any other financial rule, follow this one:  If you can’t afford it, don’t buy it. "It sounds simple, but with easy access to credit, it can be very difficult to have the discipline to deny yourself or your children something they really want.  But it’s so important to not overextend yourself if you want to avoid long-term money problems. You may not have the fairytale lifestyle of the rich and famous that is promoted in the media, but at least you won’t have to worry about how to make the payments for those things you can’t really afford.”

If you can’t pay cash, you probably can’t afford it.
Quinilty says this advice goes hand-in-hand with living within your means. "If you don’t have the money to buy something and are forced to use a credit card to purchase it, then you shouldn’t buy it, except in extreme emergencies.”  She adds that a big part of the problem is that carrying large amounts of credit card debt has become all too common. "Credit is easy to get, but you still shouldn’t use it if you can’t afford it, and most people know whether or not they can afford a purchase. The same is true for house or car payments. While these types of purchases are typically done with loans, you need to make sure the monthly payment is within your budget.”  

If you are worried about your finances, stop spending money.
It may seem obvious, but this is not something most people do. Getting further into debt will only make a bad situation worse. "You’d be surprised at how much you can save by eliminating unnecessary spending.  Things like dining out, movies, and morning lattes can really add up. Putting that money toward paying down debt, or saving it, can really change your overall financial situation, and help you be better prepared for any unexpected expenses,” says Quinilty.  "Start tracking your spending, make a budget and stick to it.”  

Take responsibility.
The government is implementing measures to stimulate the economy, and those should help, but it’s important to accept that your personal finances are really your personal responsibility, says Quinilty.  "Don’t count on someone else to save you. You should always be prepared for that eventual rainy day.  Set aside an emergency fund that you can access when you really need it for things like the loss of a job, medical expenses, hurricane repairs or other unforeseen financial demands. Having this ‘rainy day account’ will also give you great peace of mind, knowing you can handle the unexpected.”

Quinilty adds that all of these suggestions work well in good times and in bad, so don’t wait until you are worried about the national economy to start making smart decisions.  "If you’ve got savings and a smart financial plan, you’ll be fine, and you’ll survive whatever ups and downs come your way.”

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