Financial gurus who have your welfare at heart often preached putting aside a portion of personal income to keep as personal savings during good times. With the continuing saga of a global credit crunch and worldwide financial turmoil, it would be more prudent than ever to consider personal measures that will fatten personal savings accounts.In a recession when businesses suffer, men and women in the streets will not be spared from personal financial impact. The risk of job losses, pay cuts and zero bonuses are real. Those thinking of striking out on their own will hesitate because of the poor economic climate.
Those too young to live through a recession will not have experienced the severe cutback on personal lifestyles, habits, wants and even needs that follow this dreaded event. Such painful belt-tightening changes in lifestyle can be a sobering lesson. Great economic times do not last forever.
What can individuals do to prepare for such a possible recession? Today we will address one issue and that is to fatten personal savings accounts.
In a recession, cash is King. Cash can be kept in the form of dollar notes and coins. Cash can also be kept in personal savings accounts, fixed deposits, treasury bonds or money markets that you understand. Cash offers security and keep their values better when prices are falling everywhere else in a recession.
Should you liquidate assets that are locked up in shares, unit trusts, properties, collectibles or other investments to raise cash? It depends on your personal cash position and personal financial situation. Usually such assets would have lost their values by the time of liquidation in a depressed market during a recession.
Why is cash so important in a recession? In worst-case scenario of job loss, we will need personal savings to tide over daily living needs for the duration of recession. For such individuals with less resource, bread and butter issues will certainly dominate concerns.
Those with a better cushion of financial savings in their fat savings accounts will have more options during a recession - to fatten their investment returns by investing in property, stocks or whatever investments that present good value. Such investments would be priced very attractively because in a recession investors avoid them for fear that such investments might become worthless in a prolonged recession.
The only trouble about investing in a recession is to know when you’ve hit bottom. What if you use your savings accounts to invest in a sure-win thingy and it bombs on you? How would you know that a recession is over? Think about that before you mobilize money in your savings accounts to riskier options.
To fatten your savings accounts, the only sure-win way is to spend less than you earn. Defer your wants. Spend wisely on your needs. In a recession, having fat savings accounts will provide security, comfort, food and good quality sleep. With enough money in your savings account, individuals should be able to ride out a recession with minimal belt tightening.
Fatten your savings accounts, whether in a recession or not, for some peace of mind.
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