In finances—as in all things in life—it’s not what happens that matters, it’s how you react to what happens. While millions of people suffered during the current economic crisis, many people did just fine because they reacted differently.
The key is to prepare for the worst even when times are good. This can be difficult, especially during boom years like the ones leading up to the current crisis. It’s tough to keep your debt under control and slowly build assets when everyone else is chasing get-rich-quick schemes. But the people who took the slow, responsible route are now benefiting. Here are some tips:
• Be an entrepreneur, not an employee. Start your own small business on the side. Expand on the ideas that work. Eventually, you’ll earn more money, pay less tax, and never be afraid of losing your job.
• Invest for cash flow, not capital gains. Capital gains are what you get from the stock market or the value of your house, and as we know they can drop. Cash flow is an ongoing revenue stream, like the money you earn from a revenue property. Even during bad times, people need places to live, so your cash flow continues.
• Invest for inflation. Having all your assets in cash leaves you at the mercy of inflation. Instead, invest in things that go up in value as inflation rises, like silver and other commodities.
