With Covid-19 taking over, the world economy is in ruins, and most probably it is going to get worse from here. Even the countries relatively safe from the pandemic are going to suffer because of a global recession. So, no matter whether you are an employee or a business owner, it is time that you put yourself in the crisis mode.
In a capitalist world where money is everything, the lack of it can be a big blow to your survival. No one wants to land up in a financial crisis. No one wants to live without papered happiness. No one wants to be broke. But, at some point in life, every one of us has been through this stage. If you haven’t experienced financial crisis yet, you might experience it in the future. It is best to be fully prepared for it. If you can’t tackle it, learn to handle it. It is a mammoth task. However, with the right tips, you can handle financial crisis effectively and easily. Read more to find out how to keep going through financial crisis and finally overcome it.
5 Tips for handling financial crisis
1. Budget is the magic word
The biggest reason that you are stuck in a monetary crisis is your budget. Well, it isn’t a sin. Anyone can go wrong with budget. If you are a newbie at budgeting, you too can go downhill with it. Fret not! Fix your budget. Cut down on unnecessary expenses. Cancel memberships of services that you rarely use. Refrain from purchasing brands. Look out for discount and offers while shopping for anything. Reduce going to expensive dine-outs and cook delicious meals at home. If you are somewhat forgetful of your spend-thrift tendencies, keep a spreadsheet. Use budgeting apps on your smartphone to keep a track of your expenses. Do whatever it takes. But remember, budgeting is the key to a better financial future.
2. Confide in the ones you trust
Your loved ones still think that you are financially secure. Only you know the truth. Now, there are two options. Either you keep spending more and more on them, resulting in being more broke than ever; or you can be honest with them about your situation. Let them know that you are stuck in quite a lot of muck. Let them know that despite your financial crisis, you do want to spend quality time with them. Moreover, if you are willing to let them in your problems, they will be willing to help you out. Even in a dire situation, you will be glad to know that your loved ones will stand by you.
Family will never desert you and so will the friends who truly care about you. Do not withdraw into your shell thinking that nobody cares now and that you shouldn’t bother them with your financial troubles. Sharing always halves your troubles. Do not be embarrassed by your condition. After all, it is just money. You will be surprised to find that now that your troubles are no longer secret and you can talk to people about it, you can get rid of the clutter in your mind and think more clearly. What’s more, you can come up with a solution together.
3. Work smart to earn more
You notice that even after cutting down on your expenses and saving every penny that you possibly can, your savings aren’t enough. Financial crisis has reduced, but it still exists. In such a scenario, there is only one thing that you can do. Work more. Take up an extra job or go for overtime work. It is tedious. But it is also temporary. You can go back to a less stressful life once you are out of your financial crisis. Do little side jobs till the crisis is averted. Try babysitting, online surveys, blogging, tutoring, etc. There are hundreds of options to choose from. Not only will you get a chance to earn more money, but also be able to bring out your creative persona!
4. Set financial goals, handle financial crisis effectively
Financial goals are important. Financial goals are helpful. Financial goals are everything. Set financial goals. Plan financially. How much money will you require in your account to be in a much better place? How much time do you require to earn all that money? What will you need to do in order to earn that amount? Can you get there faster? Make a list of such questions, sit down on a sofa, and answer them honestly. Once you have answered them, get to action. Very soon, you will be out of this financial crisis.
5. Let go of things you don’t need
We were all teenagers once. We all have a fair share in thoughtless, reckless expenses. We all have at least one thing that we purchased unnecessarily. They could be clothes that were once the talk of the season, or musical instruments that made heart-throbs out of shy youngsters. These things are lying in your closet. Don’t ignore them. If you have no use for them, consider selling them. You will earn extra cash easily and your financial crisis will be a little less nerve wrecking.
In cases, however, where everyone is going through a crisis at the same time, selling unnecessary assets might not work. So, you might have to put up with lack of funds, which, at times, could become nerve wrecking.
How to deal with Lack of Money
While some may think that it is not possible for people to grieve over financial losses and lack of money, it is quite true and happens all the time in life. Any kind of loss triggers grief and anxiety. A financial loss is as saddening as a personal loss relating to relationships and might affect you the same way. The common conditions when one experiences financial difficulty are –
- Social withdrawal
Being without money also saps our morale and make us feel like we have hit an all-time low. We yearn for the things we had or want to have, that we cannot afford. A lifestyle led earlier, things owned that were precious but had to be given away, all these can have emotional effects on the whole person. When you incur money loss it is not just a loss of the cash that you have but your whole life, your plans of retirement, your savings for a college degree, so often also a house. It is not surprising to thus find that we tend to withdraw into a person who would not want to take part in any social gathering but rather stay by himself.
Dealing with loss of money might seem hard but it is not impossible. If we feel like we have hit rock bottom, then we should pick ourselves up and start taking the positive route.
Learn to accept that now you have no money. You cannot afford the things you had earlier so if it has to be let gone off, then so be it. Denial can be harmful. So often we see that people who have undergone financial troubles go out and purchase things unnecessarily and sometimes even more so, to make themselves believe that all is well.
2. Learn your lesson
If you have undergone money loss due to poor financial decisions, take your lesson from it and imbibe it in the future. Perhaps it was someone you trusted or perhaps you did not make a proper study of the investment that you made. Whatever it may be, do not repeat the mistake again.
3. Find the joy in simple living
In the darkest of clouds as well, there is always a silver lining. Find this time to mull over your thoughts and put them into perspective. Once you have found your way back into the world from the shell that you were living in, also find some quiet time alone by yourself and take joy in the simple things of life. Nature is bountiful so take this opportunity and use it as a hiatus. Instead of taking it as a defeat, take your losses as a stepping stone and a break from a hectic life. Spend your time with your family as much as you can. The simple joys of laughter and warmth that are found within a loving family can be found nowhere else. Set an example for your future generations that you can laugh and smile despite your difficulties and lack of money.
All the above points might help you with overcoming a financial crisis. But what if another crisis follows the first one? Especially if you are a business owner, you might know about how crisis often follow each other. And if you are not prepared in advance, they might end up robbing your blind.
How to avoid future financial crisis as a business owner
Often new entrepreneurs do not give sufficient attention to financial management. If this mistake is not rectified on time then it can cause huge damage to your business. Often the resource which small enterprises lack is money. Don’t let this vital resource go to waste, and make sure that cash flow is steady.
Every penny has to be counted for running your business well. You also have to be ready for financial challenges that changes in the market may pose. To help you come out through the maze of financial management some helpful tips have been discussed in the following paragraphs.
1. Learn the basics of accounting
Alone you cannot manage all the different aspects of your business and you will hire professional accountants and bookkeepers. Still it is better to learn accounting because the financial aspect of your business always affects the other aspects like marketing, business expansion and production. If the professionals you hire try to cheat you or make any mistakes you will be able to catch them early.
Always check the accounts on your own and keep limited sums due with your suppliers. Also ask for up front payments from the customers. Every day manage the accounts book at the end of the day. There are several high quality costing and accounts management software which you can use for your benefit.
2. Don’t mix business with pleasure
Every penny your business spends should be accounted for. Do not randomly use business funds for personal expenses. This is an ethically wrong practice. Entrepreneurs who use business funds for personal travels not only lose the trust of investors but also the scope to grow.
You can pay for business trips but if you want to take your spouse and kids along, then pay for them out of your pocket. This way you will be able to account for every penny invested in developing your business.
3. Cost effective invoicing system
Electronic invoicing is the cost effective alternative that you must try instead of the printed invoicing. Traditional invoicing costs more and managing so many papers can become a great difficulty. You can track the billing experience and satisfaction of customers and also get feedback through mails. It is also possible to check if the customer has opened your invoice mails and checked it or not.
4. Emergency fund
You have a family emergency fund in all probabilities. Make one such fund for your business as well. You never know when there will be a financial crunch or you will need extra money for a necessity. Keep sufficient money in your emergency business fund. Good entrepreneurs also save for rainy-days so that they can pull their business up and lead it forward.
5. Learn to negotiate with vendors
There are vendors who give products on credit and collect payment after a period of 30 days. You can try to negotiate prices with vendors and try to get a grace period from them. Be honest and diplomatic at the same time. If you agree to all their terms then they will never give you any benefits of bargaining on their own.
6. Do not hire too many staffs
Small businesses should hire employees who are active and ready to multitask. Your manager and you can make coffee in turn or take back pending work home. Working in startups has its own set of benefits. In the beginning one may have to shoulder more responsibilities than the job description describes but later on they can even get a share in the company or a big promotion. Hire efficient employees but keep the number of workers to a minimum.
Many wise thinkers say that money doesn’t provide anyone real happiness, that it is, in fact the root of evil. But it is equally wise to notice that money does provide us with the necessary comforts of life for how can you get a roof over your head, the food that we put on our clothes, the clothes that we cover ourselves with, without money? Yes, it cannot provide us happiness but it sure can give us a start on how we go about our lives.
Financial crisis is unexpected and inevitable part of life. However, if you ever find yourself counting your last pennies, don’t worry. Just remember how to handle financial crisis effectively. Use these tips wisely. Work hard. Work smart. In the end, you will triumph over the crisis.