Paying off your debts, building up your emergency money and ‘doubling’ your investments are just three of the ways you can make your finances ‘recession proof’, an expert has said.
Canna Campbell, from Sydney, said that while many people get scared when they hear the word ‘recession’ or even ‘depression’, you don’t have to feel anxious, scared or panicked – and in fact you can use this time to financial advantage.
“There are five things you should do with your money management in such a time,” Canna said in one Youtube video about the subject.
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Paying off your debts, building up your emergency money and ‘doubling’ your investments are just three of the ways you can make your finances ‘recession proof’, an expert has claimed (Canna Campbell shown)
Canna Campbell (photo), from Sydney, said that while many people get scared when they hear the word ‘recession’ or even ‘depression’, you don’t have to feel anxious, scared or panicked
1. Manage your debt with the aim of paying it off as quickly as possible
The first thing Canna said you should do is manage your debt responsibly and pay it off as soon as possible.
“You need to understand who you owe money to and how much,” Canna said.
Once you have done this, it is a good idea to have something like an Excel spreadsheet with which you check in regularly to see how much you owe and when the next refund is due.
“You need at least a minimal repayment plan,” she added.
If you can, maximize this refund.
For example, if you owe $ 1,000 on a credit card and the minimum repayment is $ 30 a month, and your budget can afford it, increase your payment to $ 100 a month and potentially pay off the debt within 12 months.
“Make sure you do what you can afford because you can’t get it back,” Canna added.
You must have deadlines around your goals.
How much emergency money do you need?
* Financial expert Helen Baker said we generally need a six-month emergency fund, especially at a time like COVID-19.
* “You can build the buffer by reducing your expenses to key posts and services, quitting early or finding a second source of income,” she said.
* If you get fired, your layoff package can be a big part of this, as well as your tax return.
2. Build emergency money
Once you have cleared existing debts, you should start building your emergency fund.
“If you have emergency money, you’re much more likely to be out of debt,” Canna said.
The expert recommends building your wealth by using the classic investment-building strategies: create a regular savings plan and try to ‘strengthen’ it as often as possible.
“If an extra lump sum comes to you, make sure you throw that money into your savings,” Canna said.
‘Saving is slow and boring, but there is a powerful lesson in it.
“By regularly and slowly paying off debt and increasing your savings, you build a positive money spirit and realize how quickly we are spending and how slowly we are making it.”
Canna (photo) revealed it’s vital that you diversify into more than one income stream than your regular salary, as many have realized they can’t count on one
3. Start diversifying into other income streams
Third, Canna said that if the coronavirus crisis taught us anything, it’s that you can’t count on the income from a single job.
“It’s so important to have a skill that will help you bring in extra cash when you need it,” Canna said.
Whether it’s tutoring, home sitter or a business, the expert said you should build passive income streams and start investing in other sources of income:
“That way it’s okay if you lose your job because you have rental income or dividend income,” Canna said.
Diversify your skills and earning power, and while it may not replace 100 percent of your earnings, you’re instantly better off and will get you back on your feet.
Although Canna (pictured) said markets around the world have fallen 25-30 percent, she said now is not the time to move money. Double instead of sensible investments
4. Sit on your hands, do nothing or ‘double’
What is “doubling”?
* Doubling is a stock buying strategy that doubles the risk when the price moves in the opposite direction that the investor had hoped.
* For example, a confident investor will buy 1000 shares for $ 100, and another 100 if the price drops to $ 90.
* The risk of doubling is that a bad decision on an initial trade will be compounded when additional shares of the same stock are purchased. However, there is also great potential for rewards.
Source: Financial dictionary
While Canna said markets around the world have fallen between 25 and 30 percent, she said this is definitely not the time to move money.
“Whether it’s your super or your retirement, now is not the time to go.” I’m in a booming investment portfolio, see how bad this recession is, I’m going to turn everything into conservative, “Canna said.
The reason for this is that if you do this, you ‘hold’ or ‘crystallize’ your losses.
“Sit on your hands and do nothing, or if you are in a financially stable situation, switch from a balanced portfolio to a high growth option – something we call doubling in the financial world,” she said.
“Remember that money is a long-term investment, at least 10 years, if not longer.”
For this reason, you should not look at a screen and your account balances every day.
Instead, trust your investment decisions and focus on the long-term strategy of your game plan.
5. Have goals to work towards
Finally, Canna said that just because we’re right in the middle of the corona virus doesn’t mean you’ve put all your financial goals on hold.
“Now is not the time to go into hibernation and stop spending, saving and investing,” she said.
Instead, you must “strengthen your financial muscles” and try to look for blessings in disguise.
“Set goals, check them in regularly, and always look for opportunities,” Canna said.
To learn more about Canna Campbell, visit her YouTube channel here.