It seems like a lot is going on right now, do you have a plan?
Every time I glance at the news it seems like something terrible is on the verge of happening. Certainly this is by design by the news corporations. But don’t be fooled if you are getting your news from any blogger, (myself included), You Tuber, TikTokker, other social media forums, you are still getting the same scare tactic “news” you get from Fox, MSNBC, CNN or others. It is simply a choice of whether you want to be in an echo chamber.
Over all I try to avoid any news and stick to looking a cute cats, puppies, cooking, crafts and incredible people on my feed. But I also enjoy the aggravation I feel when my echo chamber is outraged over one thing or another.
All the information can make it difficult to know where to start if you think the economy is going to crash any minute. If you are worried your job will be eliminated, or if you have already been laid off, furloughed, or outright fired, you are not alone. Many people are facing this exact circumstance today. Thousands of government workers have been fired then rehired, and will possibly be fired again soon. Retail markets are noticing a down turn, that will mean employees will be downsized. I’m glad I don’t sell Tesla’s for a living, I have no doubt those sales folks are worried right now, at least in America where some dealerships have seen vandalism or protests due to Elon Musks role in DOGE and other problematic views/gestures he shares on social media or when he is at a speaking engagement.
Do you have a plan if you are out of work and out of income? It may seem a bit doom and gloom to always be prepared for the worst case scenario, but I argue it isn’t doom and gloom, its prudent to have a plan. Some very entrepreneurial types suggest a ‘plan b’ is for losers, and you must fully commit to your endeavor. That can work for some. I suspect those who make this all or nothing suggestion are already highly successful, or come from a background that includes enough wealth for forgiveness when things go wrong.
Dealing with your highly personal reality is crucial for weathering storms. So what is the plan “just in case” you find yourself without an income?
When I was first going through a divorce my financial reality was simple. I didn’t have enough income to cover all my expenses, I had a lot of debt and my income was 20% lower than the median for the area I was living in. I had to give myself some tough love. Without honestly looking at my financial circumstances I would not be where I am today.
What does tough love look like for a person starting out?
Evaluate your job security, be honest about your prospects.
Evaluate your income to debt ratio.
Be honest about your spending habits.
Get real about what you NEED versus what you WANT.
Let’s break it down-
I have a friend who works for a print newspaper in a major metropolitan area. She is pretty close to retirement age, so she will be fine, but if you are starting out or mid-career working for a newspaper, its time to look at increasing or changing your skill set, that opportunity will end, along with many other opportunities, like anything that can be done by AI. If you have kids, it’s time to work with them to understand what type of jobs will likely be available in the future. Jobs like plumber, construction worker, glazier, vet tech, or any job that requires physical presence or good interpersonal skills and can’t easily be automated. This change is going to happen really fast, being prepared is all we can do, the change will happen if we like it or not.
How secure is your job? Be honest, look up statistics and look at information about what the future may hold. Read Yuval Noah Harari’s book “21 Lessons for the 21st Century” . It offers great insights about AI and the future. Be prepared.
How much debt do you have?
Did you buy a new car, and a new wardrobe for your first customer service job at the bank, hotel, retail outlet or other face to face customer interaction job? That may not have been a good investment. Are you routinely buying food, movie tickets, concert tickets, clothing, and other consumables on credit. It’s time to stop doing that and start figuring out how to pay off your debt and start investing your income so it grows.
The transition to spending a little and saving a lot is hard. It requires a little sacrifice and you’ll have to shed your ego. Over time you’ll find that most people are more concerned about what you think of their car, clothes, and vacation bragging than they think about you and what you have or have done. Just get over it and take a bit of time to be frugal. It maybe that you only have to sacrifice for a short time to get your debt in control.
Having no debt means that when or if you lose your job you should have more options, like going back to school, or finding a job that is better aligned with your lifestyle or income needs. Overall debt free living is recession proof living, it is income safety should you find your self looking for a new opportunity whether it is by choice or not. In any case, as prices rise you’ll be debt free and less concerned, because you have money set aside to help you through difficult economic times.
When I was furloughed during the pandemic, I was able to receive unemployment, but if I hadn’t qualified, I would still have been financially fine, because I don’t carry debt and I have a good nest egg I can draw from. Make sure as you are achieving your goals one goal is financial independence, you may struggle at times, but you’ll never regret having money when you truly need it.
Get out of debt as soon as possible and make sure your ‘emergency fund’ is invested so it will earn while you are earning.
How often are you going shopping with the ladies, or going to brunch, out for dinner, or just cocktails. How often does your idea of entertainment include spending money? Are you buying several new outfits each season? Are you thoughtful about how you use your heater or air conditioning, Do you hop in your SUV to go to the convenience store. All these habits add up, and they are utterly forgettable, particularly the outings that include dining out. If you are doing this all the time the ‘occasions’ will blur into a meaningless evening.
Make any outing that includes spending an investment. Learn something new about a person you love, make it mean something so it will last in your memory, instead of a quick bite that is forgettable. I always want my indulgent time to be a conversation, uninterrupted, with someone I love, while we hike or walk. I may not remember the walk or hike, but I’ll remember the investment in my relationship and the loving companionship forever.
Want versus need-
A while back I went to have my car tuned up. It cost $600.00. A great investment since I know I never want to buy another car again as long as I live, my car has to last the rest of my life. Other expenses associated with my car include gasoline and insurance.
A tune up, gasoline and insurance are NEEDED. A new fancy car with all the neat accouterments is a WANT.
I have one pair of jeans I bought in 2017. I dislike jeans, but sometimes I need a causal pant in the cold weather. I’ll not buy another pair of jeans, I don’t NEED another pair. However I bought a pair of hiking boots for $180.00 recently. I hike a lot and my old pair, from 2015, wore out. I hope my new pair will last ten years. Hiking boots, for me, are a NEED. After all if I get hurt hiking, I might never NEED hiking boots ever again, and that would be heartbreaking.
When considering a purchase ask yourself if it is truly NEEDED or actually just WANTED. Sometimes I look on ETSY for fashion rings. I like the idea of having a pretty ring I can wear for special occasions. But I never buy fashion rings. I don’t NEED a new ring, or another ring. I have plenty, in fact I hardly wear rings anymore. But I like looking. I love new shoes, and a new handbag. But I don’t buy shoes and handbags because I don’t NEED them.
I NEED educational materials, good health, vegetables and fruits, exercise and fresh air. Anytime I think about buying something, I consider want versus need. It isn’t always easy, and in those cases I set aside the item in my online shopping cart and think it over. I look at the item a week or two later, by then I often find the item is a want versus a need. Remember to invest versus spend, in all areas of time, money, and effort.
Finally please remember unless you are a billionaire you have zero control over what will happen in our economy, be prepared for anything and you’ll at least be okay should things fall apart. Learn to control your impulses, eat more beans and save your money for a time when you really NEED it.
If you want to learn more about frugal living buy my book, “Never Worry About Money Again: Gain Financial Freedom By Becoming Better At Managing The Money You Have”
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