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Personal Finance Tips for Middle-Class Families in Harsh Economic Times

personal finance tips

The world economic crisis of the last 5 years has revealed much about the vulnerability of the middle class in withstanding financial crisis. Economic crisis typically results in loss of jobs, slash in salaries and wages, austerity and inflation. While there is no special way of managing a financial crisis in a harsh economy, the following finance tips are suggested ways of adjusting to the heat that comes with it.

Top Finance Tips to Start Following Today


Prepare a Family Budget

Family budgets may sound mundane but in a harsh economic environment, they are life-savers. A breakdown of what you spent in the past month is a sure way to project what the subsequent month will look like. By the time you are done, a clearer picture of what you spend on the most will be revealed.

Have a Steady Source of Income

Of course, you can’t survive a harsh economy without a steady source of income. If you do not have a job then you must be self-employed. Your budget will guide how you manage your income such that if you are running a deficit, it’s either you increase your income or cut down your expenses.

Get an Alternative Source of Income

An alternative source of income is very crucial to survival in a harsh economic environment. Nothing wrong with earning some extra cash doing some business, or trading in the stock and money market.

Avoid Lending

Because everyone is struggling and cash is hard to come by, the rate of borrowing is usually high during harsh economic times. As such, it is important you avoid lending money to people because the likelihood that you will be refunded is very low.

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Avoid Stashing up Debts

As mentioned above, things are pretty much tough during harsh economic times and it may be tempting for you to want to borrow to augment your finances or purchase an asset. If you must borrow, then explore borrowing from family, friends or your office. Bank borrowing must be your last option.

Save 10% of your Gross Salary

Savings in a harsh economy can be quite onerous, however, it is very important as the next tips will show. At least 10% of your Gross Salary (not take-home pay) should be saved every month no matter what. This requires a high level of discipline and perseverance.


Harsh economic times always produce investment opportunities and incentives. Share prices, bonds, etc are usually cheap at times like this, presenting a once-in-an-economic-cycle opportunity to buy. The upside is that you sell for a good profit when the economy has regained momentum.

Search for great deals

Just as investment opportunities are available in tough economic times, so are great consumer deals. Companies are loaded with piles of inventories they want to dispose of and will go as much as selling them at cheap prices. You should scout for discount deals in the papers, TV, radio etc. These days there are numerous websites that offer amazing deals. You should get familiar with them.

Avoid Expensive Assets

Expensive assets are assets that produce little or no income but generate huge maintenance and running costs. A light bulb is an example of an asset that generates high operating cost by adding to your light bills. Energy-saving bulbs are better suited. Expensive, fuel-guzzling cars are another example. Generators that may be cheap when bought are sometimes very expensive to maintain.

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Sell Unwanted Assets

Following the above, if you have assets that are a financial drain to you, then sell them. I remember a friend who had a car that he kept repairing. At the end of the month he realised he was spending more money on fuel and maintenance than he would have had he used public transportation. Of course, he sold it and went for public transport.


Culled Nairametrics

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