“I work in the tourism sector and I’m worried that the current international financial situation will cause me to lose my job. I don’t know how I’ll be able to manage without this income, and I’m feeling really scared right now about my future.”

The global economic crisis is having a negative impact on a wide cross section of the society – large conglomerates and small businesses, company executives and line staff, wealthy people and the poor. Institutions and individuals alike are reeling from the repercussions of a financial world in turmoil.

A reader recently asked me how it was possible for me to advise people in this financially challenging period. The reality is that whether times are good or bad, the principles that govern money remain constant.

If you understand the essentials of how to manage, multiply and maintain your money, you will always be able to keep a sound footing even in the midst of a financial storm.

While we should be concerned about the current economic situation, there is very little that we can do to prevent job losses, rising prices, and other potentially detrimental events from happening. However, we can try to control the effects that these negative occurrences may have on our lives.

Are you fearful about your financial future? Here are some steps that can help you to prepare for, and conquer your worst fears:

Know your current financial situation

You must first be aware of all your current expenditure requirements. Use the personal budget planner located at www.financiallysmartonline.com to tally up all the things you spend money on over the year. Then break all the figures down into average monthly amounts. When you add up all the monthly expenses, it will give you the average figure that you need to earn every month to meet your spending needs.

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Next, put in all your current sources of income, including salary, commissions, remittances and interest. The budget will then indicate if your earnings are enough to meet your expenses. Most people find that they have a shortfall in income as they are really spending more than they earn. The following steps will help you to deal with budget shortfalls.

Save more, spend less

If income disruptions might be in your future, you need to get ‘lean and mean’ by cutting back on your non-essential spending and focusing on saving. While we don’t advise you to stop spending completely as there are businesses that depend on your support to survive, you must choose wisely where each dollar goes.

If you haven’t already started, put away as much as you can every month towards building up an emergency fund. Your target is to save at least three to six months of your average monthly expense figure. This will serve as a cushion to help you pay your bills if you happen to lose your job.

Live within your means

It’s always unwise to borrow to finance your lifestyle, so get out of the habit of spending money that you don’t have. If credit cards are your preferred way of meeting your expenses now, practice using a debit card or cash instead. You’ll want to be debt-free if your worst fears are realised, so postpone any plans to borrow at this time.

If you are currently in debt, your objective should be to reduce the amount of your monthly cash outflows. Make a plan to pay off any existing loans as fast as possible by increasing your periodic payments or finding extra cash to pay them down completely. Try to consolidate higher interest debt with a lower interest loan.

Get creative in earning more

Many people are unable to make ends meet even with their regular salaries, so the thought of losing that income leaves them terrified. Get proactive by looking for additional ways to earn money, so that you will create multiple income streams and give yourself breathing room if you are made redundant.

Remember that there are only three ways to earn money – find a need and fill it, find a problem and solve it, or find your talent and market it. Look around at your community, workplace, school or church for opportunities to earn by fulfilling people’s needs, solving their problems or marketing your talents in a way that people will pay you. Go to http://blog.financiallysmartonline.com to find practical income creation ideas.

Focus on your goals

When financial crises loom, it’s important to have an unwavering focus on something that’s bigger than your problems. You must envision a superior financial future that will help to motivate you through the tough times. There are many inspiring stories of persons, who with singleness of purpose and strong belief in their goals, weathered poverty, deprivation and tragedy to create the lives of their dreams.

To kick-start the goal achievement process, create your vision and focus on the reasons why your dream is important to you. Then, get professional advice on how to turn your dream into a specific and measurable goal. Your next step is to act immediately in carrying out the action plan, and then to stride persistently towards the goal line despite the setbacks that will come.

History has shown that difficult financial times have always been followed by dramatic recoveries and change for the better. So follow these simple guidelines, and you will be able to conquer your fear about your financial future!

Copyright © 2008 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, December 04, 2008

Cherryl is a financial consultant and coach, founder of Financially S.M.A.R.T. Services. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Contact Cherryl