How to manage money in a crisis and instability, do you need an airbag at this time, how to create it, what to save on and what to invest in to increase income – Emma Bayramova, financial consultant and founder of the Emma School of Financial Literacy, told BeautyHack.ru about all this finance school.
1) Shape the airbag
A reserve of money “for a rainy day”, “a small egg”, “emergency reserve” – the meaning does not change from the name. This is the amount that will allow you to provide for your life in an emergency. For example, if your company went bankrupt or you were laid off. The ideal airbag should be equal to the sum of your six-month costs. For example, if you spend 50,000 rubles a month, then your pillow should be about 300,000 rubles. This money in case of loss of work, illness, relocation will help you to recover and arrange your life for the first time.
You can build such a cushion gradually, monthly setting aside part of your earnings to a separate account, ideally with a percentage of the balance, in order to at least partially cover inflation. Such an account can be opened in the application of your bank in just a couple of clicks. And even call it “Airbag”. Read more about the airbag
2) Avoid unnecessary spending and don’t make impulse purchases
In crises, it is very important to look at the statistics of your expenses and draw conclusions, which of them should now be abandoned. After all, it will be possible to buy second necessities later, when the situation stabilizes, but in a crisis it is still better to focus on what is important and necessary.
Also, do not make crazy purchases during serious economic shocks. A good example is the massive buying up of TVs and washing machines during the jump in the exchange rate in 2014 and early 2022. For some reason, people ran after equipment they didn’t need, trying to invest in at least something. Although it would be much more logical to put this money on a bank deposit, which during these periods could bring 18-23% per annum.
3) Learn to invest
During a crisis, the value of stocks, bonds, cryptocurrencies and other assets can fall sharply, and recover after it ends. If you know how certain tools work, you can make money on it. Therefore, be sure to study the work of the stock market, this will help you buy assets that have fallen in price and increase your savings due to their growth.
To learn how to do this, be sure to read a few books on investing. Take Bernstein’s Investor Manifesto, for example.
In addition, the ruble is a rather volatile currency. We saw that in 2022, one dollar could be bought for both 120 rubles and 50. If you buy currency when it is cheap and sell when it grows in price, you can also increase your investments in rubles. However, this must be done very carefully. And ideally, have savings in 3 currencies to avoid the risk that all your savings will depreciate if you keep money in only one.
4) Beware of scammers
In crises, they are especially strongly activated and begin to put pressure on the “sore” points of people. Someone is trying to intimidate over the phone, and someone offers to multiply your money at times if you transfer it by card number. Always remember that free cheese is only in a mousetrap. If some person knew how to increase money by 50% per day, he would become a billionaire cooler than Elon Musk. Why then does he need ordinary people’s money? That’s right, because he’s a scammer. And if in a crisis they start calling you from banks, the police or other structures, hang up and call back directly to the bank, the Ministry of Internal Affairs, if you think that the call can be real.
5) Don’t Panic
This is the biggest problem that people face during crises. If it were not for the panic, no one would run to buy a dollar for 150 rubles from resellers, then to sell it for 50, fearing that the US currency would collapse. If it weren’t for the panic, people wouldn’t be buying up buckwheat, toilet paper and TVs in fear that they’ll run out. There is no need to look far for examples, I think each of us has acquaintances or relatives who regret their panicky decisions made during the crisis.
Try to put aside emotions and approach everything with a calm head. And be sure to follow diversification, that is, never store eggs in one basket. And then you will definitely be able to protect yourself and your savings.