by M.J. Holliday

Created on: September 05, 2008   Last Updated: September 12, 2008

How to Survive and Thrive in Difficult Economic Times

In a tough economy, do you tighten your belt, clip coupons and gaze wistfully at things you can't have? Scrimping may stretch a dollar, but to beat the economic crunch, find ways to make your money work for you.

1. Understand your Finances.

Make a budget to identify wasted spending, and to find money you didn't know you had.

Even if you've never made a budget before, it's easy. Expensive software isn't necessary. Start with two columns on a sheet of paper. One is income. One is outflow.

Add details as required. Work with real numbers and don't guess. Keep receipts. A basic understanding of monthly cash flow can target unnecessary expenses, such as high payment fees or impulse buys.

A budget is a tool to help you make the most of your money.

2. Wants vs. Needs

Everything from fast food to premier cable TV becomes a need, if you're convinced you need it. All a human really needs is shelter, food and warmth. Other needs are based on wants. Today's human doesn't live in a cave, eating grubs, but ask yourself what you really need to thrive and be happy.

You might need to exercise, but you don't need $1000 worth of gym equipment.

3. Make an Investment

Invest your money. For example, if you can afford the down-payment, now is a good time to buy a house. It's a buyer's market, and prices will rise again.

Tenants can pay for twenty years with no control over the future. Owning property puts the same monthly payments into a secure investment. Your money is working for you, not the landlord.

4. Start a Business

A second or third job helps pay bills, but depending on others for a paycheck can limit your income. Take control over your financial future, and start your own business.

Self-entrepreneurship isn't for everyone, but if you have a marketable skill, talent or product, consider using it to your benefit. Many financial empires were built on a simple idea.

5. Money-Saving Habits

Amend some habits to eliminate wasteful spending. Save $200 a month by turning off lights or walking instead of driving. If no one's watching TV, turn it off. Use a night-light in the bathroom instead of leaving the light on all night.

Ride a bike to save on gas and eliminate rush hour stress. Save $1000 on gym equipment by riding the bike. Start a college fund for the kids.

It is possible to thrive in economic hard times. Don't look at saving money as self-denial. Enjoy your quality of life, and make the money work for you.

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