This is all theoretical, if I had the key to succeeding on this economy I wouldn't be writing on Hive, I would be getting interviews by Forbes and CoinTelegraph asking me for the key to success.
On the other hand, I like to think that I do have some basic understanding on how to succeed and even though I am not there yet, I am slowly grinding my way towards financial freedom and economical independence. This is just a broad baseline of how I understand several factors that will be the difference between succeeding on this economy and failing, at least according to my own definitions.
Bad times are opportunity times
The last few years have been a whirlwind of change, with the pandemic forcing many to rethink how they work and live. As a result, more and more people are turning to new skills and alternative forms of employment to stay competitive in the job market. For those looking to expand their skill sets quickly, one strategy is to focus on learning in-demand skills. Data analysis, digital marketing, web development, and design are just a few of the highly sought-after skills that can be learned through online courses and workshops.
While building new skills quickly is important, it's equally crucial to build a high-quality portfolio over time. Instead of rushing to complete numerous projects, take the time to select the best work and refine it to a high standard. This approach can be particularly important for creative professionals, as the quality of the portfolio can make all the difference when it comes to securing work opportunities.
In a world where money is scarce and governments are printing money, investing in new skills and a strong portfolio can make a huge difference in your earning potential. By taking the time to develop valuable skills and high-quality portfolio work, you can position yourself to take advantage of new opportunities and succeed in a rapidly changing economic environment. Keeping up with industry trends and developments is also key, as it enables you to adapt to changing market conditions and stay competitive in the long-term.
The Ghost of recession
As the economy faces the possibility of a recession, it's important for individuals and businesses to prepare and adopt strategies to stay afloat and thrive. One approach is to focus on reducing debt. When the economy slows down during a recession, generating income can be challenging, making it harder to pay off debts. Therefore, it's important to prioritize debt repayment and reduce as much debt as possible before the recession hits.
However, not all debts are created equal. Good debts, such as those that help generate income or increase net worth, should be assessed differently. For instance, loans taken to start a business, invest in real estate or finance education can be considered good debt. During a recession, it's essential to differentiate between good and bad debts and pay off the bad debts first.
Another strategy is to take advantage of the low-interest rates that the government may offer during a recession. This can be an opportunity for individuals and businesses to refinance their high-interest debt at a lower interest rate, reducing the overall debt burden. However, it's important to be cautious and take on only manageable debts that will not lead to further financial difficulties.
Furthermore, building up an emergency fund is crucial to prepare for unexpected expenses or loss of income. While it's recommended to have three to six months of living expenses saved in an emergency fund, it may be wise to save even more during a recession.
Overall, being proactive and adopting strategies such as reducing debt, taking advantage of low-interest rates, and building up an emergency fund can help individuals and businesses navigate through tough economic times and emerge stronger on the other side.
An unfair system
"Banks only lend money to those who don't need it."
While there's a grain of truth to it, it's not completely accurate. Banks are in the game to make money, and they want to lend to folks who are likely to pay back their loans. This means they generally look for borrowers with good credit scores and steady incomes, as they're less likely to default on their loans. In return, the banks can offer these borrowers better terms and conditions.
On the flip side, if a borrower has a shoddy credit history or unstable income, they're considered higher risk. In these cases, the bank may still be willing to lend money, but the borrower will have to accept less favorable terms, like a higher interest rate or stricter repayment terms.
But let me tell you, banks aren't just looking to lend money to folks who don't need it. They exist to lend money, and they're willing to lend to a wide range of borrowers. Even those with less-than-stellar credit or shaky finances might be able to secure a loan, but they'll have to deal with higher interest rates and stricter repayment terms.
Now, let's talk about good debt. This is when you borrow money to invest in something that will increase in value over time, like a business or real estate. Good debt can be a savvy investment move, as long as you can handle the repayments and have a solid plan for paying back the loan.
When the economy is in a slump, the government may lower interest rates in an attempt to encourage borrowing and spending. This can make it more affordable for borrowers to take out loans, but if too much money is borrowed and spent, it can lead to inflation. That's why borrowers should always be mindful of the interest rates and repayment terms of any loan they take out, regardless of the economic climate. It's crucial to consider whether the loan is truly necessary and whether it can be repaid comfortably over time.
A valuable strategy
In these uncertain times, having multiple sources of income can be a powerful defense against an unstable economy. This approach is often called "diversifying your income streams."
When you rely on a single source of income, like a full-time job, you are more susceptible to economic changes that could result in job loss or reduced earnings. However, if you have several income streams, you are less reliant on any single one and can weather any potential loss.
In addition to improving your financial resilience, diversifying your income streams can assist you in making more informed financial decisions. When you have several revenue streams, you can prioritize which ones are more critical and which ones can be cut back in the event of an economic downturn.
Working several jobs or taking on freelance projects is one method to diversify your income streams. By diversifying your earnings through multiple part-time jobs or freelance assignments, you can distribute your income across different sources. This can also provide additional benefits, such as developing new skills, building your professional network, and exploring new career paths.
Apart from working multiple jobs, there are other ways to diversify your income streams. For example, investing in the stock market, starting a side business, or earning passive income from rental properties or investments can all provide additional income streams. These additional income sources can also serve as a source of financial stability in uncertain times.
Overall, diversifying your income streams is a sound financial approach for transitioning from a defensive to an offensive stance in a struggling economy. By having multiple revenue sources, you can better shield yourself from potential revenue loss and make more informed financial decisions.
Investing is for everyone
Investing is a viable option for building wealth, but it requires adequate resources. As mentioned, a high income or starting a business are common ways to acquire the funds needed to invest. However, self-employment, such as being a doctor or a lawyer, may pose a challenge.
Self-employment offers the potential for high income, but it requires hard work, discipline, and organization. Building a successful practice or law firm takes time and effort, and it may not be the best option for everyone.
For those with a stable income, investing a portion of that money can be a good strategy to fund their entrepreneurial goals while having a safety net. However, managing investments and working on a personal project can be challenging.
To overcome this, prioritizing and optimizing the available time can help. This could involve delegating tasks, outsourcing responsibilities, or increasing productivity. Additionally, having a clear plan and a realistic timeline can help to stay on track and make progress towards both investment goals and personal projects.
It's important to note that investing always carries risk, and it's crucial to understand the potential downsides before committing funds. One strategy is to diversify investments across different asset classes and industries to spread risk and minimize exposure to any single investment. It's also essential to conduct thorough research and seek the advice of a financial professional before making any investment decisions.
Finding the right balance
To maintain a growth mentality, one must always seek self-improvement and development. This requires a mindset that embraces learning, taking risks, and seeing challenges as chances to grow. The importance of this mindset lies in its ability to help us face life's ups and downs, especially when setbacks or challenges arise. With a growth mindset, we are more likely to push through and find ways to overcome obstacles.
However, it's also crucial to realize that growth doesn't always equate to expansion. There are times when we need to focus on consolidating our achievements and contracting our efforts. This may involve reflecting on our priorities or honing our existing skills and knowledge, rather than constantly seeking out new opportunities.
Balancing contraction and expansion is essential for sustainable growth. It's crucial to recognize when we need to slow down and consolidate, and when we need to push ourselves to take on new challenges and opportunities. Being mindful of this balance can prevent burnout and pave the way for long-term success.
What about cash flow?
Maintaining a balance between investing all your money and having a steady cash flow is a complex decision with its own set of advantages and disadvantages.
On one hand, investing all your money can generate higher potential returns as your money is working actively for you. However, this approach comes with risks, such as not having enough cash on hand to cover unexpected expenses or market downturns. Moreover, when all of your money is invested, you may miss out on new investment opportunities.
On the other hand, having some cash flow can provide a safety net in case of emergencies or unforeseen expenses. It also gives you the flexibility to take advantage of new investment opportunities as they arise. But having too much cash on hand means your money is not working hard enough for you, and you might miss out on potential investment gains.
Maintaining a balance between cash flow and investment is key to avoid being "cash poor." Keeping enough cash on hand to cover your expenses for a few months is wise in case of emergencies, but too much cash can mean missed investment opportunities.
To avoid spending more than you earn, having a solid budget and financial plan is vital. This involves tracking expenses, setting financial goals, and following a budget that allows you to save money and invest for the future. By maintaining a healthy balance between cash flow and investment and having a sound financial plan, you can work towards your long-term financial goals while being prepared for unforeseen events or emergencies.
Success conveys risk
Taking risks while young can be beneficial because young people have more time to recover from potential failures and losses. They have more opportunities to learn from their mistakes and rebuild their wealth. Additionally, young people often have fewer responsibilities and financial obligations, making them more willing to take risks. However, it's important to weigh potential rewards against potential risks and have a solid plan in place before taking any major risks.
Maintaining both wealth and health is crucial for long-term happiness and success. Proper financial planning and risk management are essential to protect your wealth. Similarly, taking care of your physical and mental health is vital for long-term success and happiness.
Working with integrity is important for building trust and respect in personal and professional relationships. Honesty, transparency, and ethical behavior are essential for better opportunities and relationships.
Consistency is key to achieving long-term success. Consistent effort and dedication will pay off in any area of life, including career, personal life, and finances.
Failure is a natural part of the process when striving for success. Embrace failure as a learning opportunity and surround yourself with people who can provide different perspectives and ideas. Additionally, be open to changing your mindset as you grow and learn.
Finally, teamwork skills are essential for success. No one person can achieve success alone, and collaboration and teamwork are often necessary for achieving bigger and better things.
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