Cash Flow is King
Having readily available cash, or "cash is king," is a sound financial strategy because it provides flexibility and stability during economic uncertainty, allowing individuals to weather market fluctuations and take advantage of potential opportunities.
Our Interest Rewards Checking Account will allow you to keep your money accessible while earning 5%APY on your balance up to $10,000. Double benefits.
Here's Why Cash is Considered Important:
- Flexibility and Stability
Cash provides flexibility to navigate unexpected expenses or opportunities that may arise during a tough economy, such as job loss or the chance to purchase assets at lower prices.
- Weather Market Fluctuations
During a tough economy, stock and property values can decline, making it difficult to access capital from investments. Having cash allows individuals to weather these fluctuations and potentially purchase assets when prices are low.
Cash can act as a safety net, providing financial security during periods of job loss or reduced income, which are common during tough economic times.
While cash may not generate high returns, it's a low-risk investment option that preserves capital and avoids the potential losses associated with other asset classes.
Cash can hold its value better than securities and hard assets, even in an inflationary period.
Additional Tips
Get Back to Basics
Create a list of Must Haves and a list of Things You Like Having. In other words, necessity vs. non-necessary expenses. Be honest with yourself. Understand where your cash flow is going and how much you could pull back on if you needed to.
Trim the fat
Now is the time to look at where your money is going, and eliminate unnecessary items. Cash Flow management is critical. Review your subscriptions, gas expenses, dining out vs. eating in house, and other extra-curricular activities.
Look into the future
Analyze what money is coming in during the next three months, specifically from where, and when. Compare this to the new cash outflows that you assessed in the step above. If things are tight that’s fine; if more is going out than coming in, trim more and find additional income. Do this exercise each month, always looking at least three months out.
Avoid the evil temptation
It’s tempting to use debt and credit cards to borrow your way through slow times. Since no one knows how long these times will last, borrowing may result in obligations you may be unable to sustain. Secure a line of credit for emergencies only.
Did you know that an Auto Equity loan can use the value of your vehicle as a cash source when needed?
In Case of Emergency
You absolutely must have cash reserves, just in case. If you have any money right now, create an emergency fund that equals one, two, or three months of your cash outflows. Put this in an account, and don’t use it unless it’s life or death. This provides a cushion just in case something bad comes along at the worst possible time. If you don’t have cash now, do everything you can to build up such a reserve. Secure a line of credit for emergencies only while your credit has not been impacted.
Destress
The difference between those that survive economic hardships and those that don’t, has a lot to do with the decisions they make. To make smart choices, you must think clearly. When you’re stressed, it’s nearly impossible to make big decisions. Some suggestions to lower your stress level include: a daily 10 minute relaxation video that walks you through deep breathing and stretching; yoga, exercise, or outdoor activities with your family. Anything that allows you to get your mind off things and relax is good.
Try not to panic or have a sink or swim, do or die mindset. Focus on the right things, and you’ll get through this. As always, we are here to help you discover solutions that are right for you. Ask us about our one-on-one financial consulting sessions.