Here are the four steps you should follow in a bad economy:
Step One: Diversify
Try not to place all of your eggs in one basket whether you are looking at your source of income, your investment schemes, or anything else. There's simple logic in this step. If you put all of your earning power into one scheme and that scheme fails, then you are in an emergency situation. However, if you diversify your income streams, pursue different types of investment strategies, and so forth, the failure of one could simply mean a minor hiccup for your income until things return to normal.
One way you can diversify your income is to start a home-based business. You can work on this venture part time while still holding down a 9-to-5 job. That way, if your business doesn't do well, you still have the security of your 9-to-5 paycheck. On the other hand, if you lose your job, you've already invested the time and effort in starting your home-based business.
Step Two: Increase Your Income
Obviously, one of the best ways to make money in a recession economy is to increase your income. However, this can mean several different things, depending on how radical you want to get. The bottom line is to bring in a higher cash flow than before, so look at ways you can boost your income.
You can take a second part-time job, start a home-based business, or find other work from home opportunities. You can also sell items around your house that are no longer being used. Craigslist and eBay make selling these items to a wide audience easy and cheap, or you might try having a good old-fashioned garage sale. Just find multiple ways to boost your income in these difficult times.
Step Three: Spend Less Than You Bring In
Of course, earning extra money means absolutely nothing if you spend more than you bring in the door. Therefore, you will want to find ways to save what you've got, so you can maximize the impact of that extra income you are bringing in the door. It's time to trim the fat - all of it -from your budget.
Some household expenditures than can easily be slashed include cable television, Internet service, mobile phone plans, clothing, entertainment expenses, and even your food budget. Look for ways to cut back on these expenses to a degree that you feel comfortable with.
Step Four: Become Financially Educated
It's also time to become financially educated. You can learn a great deal about how to save cash and boost your income by financial planning courses or by reading up on financial planning with your favorite money experts. Read up on tax strategies, estate planning, wills, and other essential ways to manage your money that will help you leave a lasting financial legacy to your children-and even your great-grandchildren.
No matter how you get your education, make a commitment to learn how to handle money smart and recession-proof your income. You'll be able to ride out the changes in the economy without losing out on your way of life.