What Can I Do To Avoid a Personal Financial Crisis

With the current financial crisis not going away anytime soon, many are getting worried about the possible negative implication to their finances. Some will end up retrenched, some will have pay cuts, and some will not even get that increment or bonus that they worked so hard for. How we plan our finances during this crisis will depend largely on our individual situation. I have always maintained that it is not wise to have only one main source of income. For most people, their main source of income is their job. Some would focus on it during the day and even bring it home during the night. In my opinion, this is an unhealthy work style and it also distracts you from also focusing on your other sources of income. If anyone mentions that this financial crisis will not affect them or their company, they are in for a big surprise. According to IMF, this crisis is one of the worse since World War 2 and it may prolong well into 2012. As for any right minded individual, eking out a living from their job, this becomes a problem. As times gets bad, people will spend less. When people spend less, companies will earn less. When companies earns lesser and lesser, retrenchment and pay cuts are inevitable in order to maintain the percentage of profits that their shareholder demands. This is a vicious cycle where employees who are consumers themselves are forced to “tighten their belt” and reduce their expenditure. Thus, further worsening the financial crisis.
Now, what do I mean by other sources income? Like I said before, I do not encourage people to only have one main source of income, their job. In the event that they get retrenched, how are they going to pay their bills and support their family? Here are some ideas on earning extra income.

• Join MLM companies to sell their products. This is a good start to rake in some sales and earn some commission as the entry cost is cheap.
• Join insurance company on a part time basis to promote their insurance product. Insurance provides a very good passive income for every sale that you make as the customer will have to service their insurance in order to maintain it.
• Join a unit trust company on a part time basis to promote their funds.
• Sell tangible stuff online. Nowadays there are a lot of opportunities for people to become business owners through the web. Companies such as eBay or Lelong.com allow you to sell your products to customer (with a fee) through their website. Selling online allows you to reach potential global customers who you might not be able to meet if you are running a physical store in some shopping complex.
• Passionate about swimming? Simply adore cooking? Take your hobbies to a new level. Offer classes for swimming or even do some catering during the weekends.

If you are uninterested in all the above mentioned, then my final advice during this uncertain times is “Create an emergency buffer of cash”. Always have an emergency cash of at least 6 months expenses to cover for any unfortunate eventuality that might occur during this critical period. If you do not have an emergency buffer, this is a good time to start. You never know what might happen and it’s always best to plan for the worse in any financial crisis before it becomes a personal financial crisis.