How to Manage Your Finances During a Depression

By Enero Febrero

By all measures, it has been a bad month for the American economy. Whether or not we’re about to enter a deep full-scale recession — or possibly even a depression — isn’t quite clear yet.

However, it’s fairly obvious that the coronavirus pandemic has had a significant impact on the monetary outlook of virtually every person on the planet.

Given that fact, it’s important for business owners, investors, entrepreneurs, and professionals in all walks of life to understand how to manage their finances during an economic downturn. Thankfully, there are proven ways to help you do exactly that. Here are four of the most basic ones:

Don’t Panic!

One of the hardest things to do during a recession is to remain calm. After all, no one likes to see the stock market plummet, interest rates hitting near zero, or a spike in unemployment.

Yet, individuals who manage their finances successfully know not to panic during trying times just as they don’t get ahead of themselves in bull markets. Resist the urge to empty your 401k or pull all of your savings out of the bank. Doing so will only make your personal financial situation worse.

Prioritize Your Purchases

An “essential purchase” under normal circumstances and an essential purchase during a recession are two different things. Individuals and businesses alike need to take a hard look in the mirror and decide what products or services they need to invest in, and what they can let slide.

Business owners can create a priority list that includes important items like point of sale solution software or a new VoIP phone system. Similarly, individuals should cut out frivolous purchases and focus on issues that are most pressing in the short term.

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