Surviving Any Economic Climate: A Simple 3-Step Guide
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Navigating Economic Challenges
A straightforward approach is often the most effective.
Mathieu Stern
Avoid blindly following others into financial pitfalls. It's crucial to understand their strategies to determine if they align with your objectives. Personally, I’m in my mid-30s and don’t anticipate needing my investment funds for at least a decade. I also intend to continue working, albeit optionally, and aim to have a steady income until I reach my 90s. If you’re significantly older than me, your financial strategy may differ. Conversely, if you’re younger, you can confidently adhere to this advice or adjust it according to your circumstances.
Step One: Maintain a Robust Emergency Fund
Keep it simple. It’s not wise to let a large amount of cash sit idle, but you also don’t want to liquidate assets in an emergency. We maintain approximately six months' worth of expenses in cash. While I have some additional funds in a money market account, that’s reserved for investment opportunities during market downturns (like the current situation).
Step Two: Create Positive Cash Flow
This can be approached in two ways: reducing expenses and increasing income.
When it comes to cutting costs, consider the usual suspects like dining out and coffee runs. Additionally, review your insurance and other fixed expenses to secure the best rates. I actually downsized my living space from a 2,400 square foot home to a 1,400 square foot one, resulting in lower mortgage payments, taxes, insurance, and utilities. I transitioned from a brand-new car in 2008 to a used vehicle in 2018.
To boost income, think about both traditional methods like seeking a raise or finding a new job, as well as exploring passive income and side hustles. My income comes from my 9-5 sales job, writing, dividends from stocks and Fundrise, crypto interest, and soon, digital products. Always be alert for opportunities; money is out there waiting to be claimed.
Step Three: Consistently Invest in Assets
I diversify my investments across four primary categories: stocks, cryptocurrency, real estate, and collectibles. Within those categories, I further diversify. My holdings primarily consist of ETFs (for a broad mix), various cryptocurrencies, and different types of real estate including commercial, residential, and industrial, as well as collectibles like action figures and Legos.
I happily invest in real estate through Fundrise. If you're interested in signing up and earning $50, you can do so here. I make these asset purchases at regular intervals, at least every two weeks, sometimes more frequently.
In summary, maintaining an emergency fund, fostering positive cash flow, and regularly purchasing assets comprise your strategy for navigating any economy. It’s straightforward to implement.
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