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Financial Survival in the Credit Crunch

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The current credit crunch has brought financial turmoil to the world. No country has escaped it, and nobody is immune from it. Whatever your situation, you will have to take account of the financial upheaval and deal with the insecurity it brings. If you have a large buffer of wealth, you will survive with a loss of paper earnings that will quickly be restored. If you’re an ordinary person who needs regular income to live on, life may not be so simple. The following ideas will hopefully enable you to stabilise your financial situation, and deal with financial problems as they arise.

The first part of any financial survival plan should be to maintain your income. You may feel this is out of your hands, but there are things you can do to improve your options. What is your current employment situation? If you are in a stable job, and your company or organisation shows reasonable survival potential, this is probably a good time to stay put. On the other hand, if you can see your job is in jeopardy, it is better to look for another job while you are still employed. You will interview better, and you can afford to look around a little more to view further options.

Sometimes employers cut costs in their workforce by reducing the number of hours or days on which you work. Rather than seeing this as a disaster, look for the positive opportunity it brings. You may be able to take on another part time job to fill the gap left by your cut in hours. This will not only replace some of your lost income, but will act to diversify your income. Should you lose your primary job altogether, a diversified income will be an important goal for the

future. You can obviously try to find a perfect replacement job, but until this happens a mix of part time jobs will mean you have steady income, and that income will not be dependant on a single source. If one part time job folds, you will still have income from the others. Our make money online and offline sections give you loads of ideas on how to bring in more money. If you are made redundant, you could try using it as an opportunity to start a project or low-cost business that you’ve always wanted to do but haven’t had the time.

We live in a world where the old idea of a ‘job for life’ is disappearing fast. Many people live their whole lives with their income structured by part time employment. Part time jobs do not have to be ‘low value’ jobs. Many organisations need complex tasks carried out, but do not have the turnover to employ someone in that position on a full time salary.

Income is only one aspect of your financial survival. To balance your books, you will need to look at money going out as well as money coming in. The best place to start is probably with your bank account statement. Bank statements have a habit of remembering things we had long forgotten or wished didn’t exist. When you look at your statement you get an uncompromising view of where your money has gone. Check your standing orders and direct debits. Are there things you could do without, such as subscriptions to magazines or services you no longer use? Often our spending is habitual, and we don’t make the effort to change things. By actively trimming your outgoings, and
buying only necessities (real necessities!), you can minimise your spending so your dependency
on a high income is reduced. Take a thorough look through our saving money section. This gives
you lots of ideas on how to save money. Our budgeting tool should also come in handy.

What happens if you get into financial difficulty? The first rule has to be, don’t bury your head in the sand. Problems will not go away if you ignore them. You only hope of financial survival is to work the problem. Even if you cannot make your income match your outgoings, there are things you can do help get back in control. In the current financial downturn, the governments of many countries are hurriedly passing legislation and introducing schemes to help homeowners stay in their homes and ride out the storm. Check what help is available and use it! Our debt help section includes lots of tips on how to get out of debt and what to do if you can’t meet your daily expenses.

Financial survival may not only be about avoiding bankruptcy, and for some it may be an opportunity for long term financial improvement. If some people are selling shares and real estate at knockdown prices, others are buying them. There are investment opportunities available in the credit crunch. If your income is stable and the kids have left home, you might consider buying a second home as an investment. This financial situation will not last forever. Whatever investment route you decide upon, we have all learned through the current situation not to rely on one investment option alone. It is important to diversify your investments. That way you minimise the impact of one investment option ruining the family finances. Whether you invest in real estate or shares and financial bonds, do not invest more than you can afford to lose. Visit the grow money section for more information on what to invest in and how to invest.

The credit crunch has shown that we do not know what is around the financial corner, and whether your immediate plan is to minimise risk or maximise opportunity, you do need to keep a close eye on the game. No one can afford to drift through life paying little attention to their financial future.

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