As the economy worsens, we’re all looking for ways to buffer ourselves from financial problems or even just the threat of them. Even those with stable and secure incomes are seeing their savings and homes dropping in value and are becoming more concerned about the future.

So what can you do to recession proof yourself? Outlined in this article are a couple of ideas with their advantages and disadvantages.

Get a Part-time Job

One of the first things many people think of during tough times is getting a part time job to supplement their income and build savings or pay down debt.

This can be a good idea, but it comes with some downsides:

• Will often have a sizable impact on your quality of life by reducing your personal downtime
• Can be difficult to find a part time job that pays as well as your full time job.
• There will be additional taxes to pay, usually at a higher tax rate because the income is added to your full time income, which can push you into a higher tax bracket.

Exhaust Your Savings Opportunities…The Best Idea!

So while the idea of getting a part time job is worth a consideration, I suggest that you first exhaust all savings opportunities. The reason for this is that a dollar saved is worth more than a dollar earned. Often much more!

A dollar saved is a dollar saved after tax, whereas a dollar earned is a dollar that will be taxed before you get your hands on it. For example, if you find $100 in cost savings, that is $100 in your pocket. If you earn $100 at a part time job, as little as only $55 will actually make it to your pocket.

How to Find Tax-free Savings

So how do we find these nice tax-free savings? Besides the practical ideas already discussed in this blog, here are some other approaches:

    1. Attack The Easy Savings First

Understandably, no one wants to cut expenses that provide them with the quality of life they enjoy and they shouldn’t do so: unless they absolutely have to, of course.

Go after the painless expenses first, especially the ones that are recurring. The way I recommend doing this is to look at every monthly expense you have and then ask yourself…is this expense contributing to my quality of life?

Using this method makes it easy to determine if an expense is worth continuing to shell out your hard earned money for or if it can be cut.

The usual places I find that are easy to cut are things like utility costs, phone/cable/internet, fuel, insurance, etc. If you can’t cut it by reducing usage or features, you can often save money by switching providers for a better deal. Paying my electricity bill adds nothing to my quality of life, so it’s worth spending some time to find ways to cut my bill, for example.

    2. Analyse Every Expense

If you don’t already have a record of all your monthly expenses (and you should!), try to make a list of every expenditure you make in a month. Take your list, go down it item by item and try to think of a way to cut that expense.

Be creative, try to think outside the box and really spend some time on each one. Go back to the list every so often and repeat the process. I’ve often thought of a new way to save on something, even though I’ve looked at it before several times.

    3. Downsize Your Expenses

Your expenses that reduce your quality of life should always be the last to be cut, but if you are ready to do so, you can ease the pain by attempting to downsize them first.

Go to Kelsey’s instead of The Keg, go to Florida instead of Antigua, eat flank instead of top sirloin, borrow from the library instead of buying the book, etc. Look at all of the things you spend money on for pleasure and see if you can still get that enjoyment, or part thereof, by downsizing it.

The Final Verdict

If you’ve exhausted all of these strategies and still find yourself in need of financial relief, then would be the time to consider that part time job! See our article on Passive Income for Turbulent Times for some great ideas.

Any questions? Want to discuss/share possible deals for cutting expenses? Comment below and we’ll be sure to provide further tips! Or join our Facebook Group!