Hide all your cash under your pillow
How much cash do you have? What if you lose your job right now?
(This is Tip #2 in the Surviving The Recession Financially series)
The next most important thing after determining your expenses is to hide all your cash under the pillow take note of your cash positions.
What do I mean by that? In layman terms, that is simply knowing how much you’re earning vs how much you’re spending. If you’re earning $4,000 (take-home pay) and spending $3,700 every month, that’s way too much - you’re not saving enough! Of course, if you’re earning $4,000 and spending $5,000, that’s just spending a weeeeeeee bit too much ya. =p
Managing your cash flow is critical towards any sort of financial management and planning. If your cashflow sucks, then how are you going to have enough money to invest, to buy insurance to protect yourself, to save for a rainy day? You end up living by the paycheck!
So no, we’re not encouraging you to hide your cash underneath your pillow. We’re encouraging you to start hoarding cash - an amount in the region of 6-9 months of your monthly expenditure should be sufficient - for your emergency funds.
This pool of money can be used in an emergency, if you lose your job, etc. I also use this pool of money for opportunistic investments. However, once I use it, topping it up to 9 months again is my top priority.
In a booming economy, having an emergency cash fund is good practice. In a recession, it’s critical!
And for goodness’ sake, don’t put it under your pillow, put it in the bank!
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