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Surviving the Financial Crisis

Money is involved in all that we do yet it is no longer a safe bet, as we have recently seen with trillions of dollars being wiped out overnight. From buying a property to the normal ups and downs of every day living, we still have to use money, yet, with the current crisis, perhaps it is time to start looking at ways to protect ourselves against job losses and money erosion. One of the best ways to do this is to reduce your monthly costs and overheads. The next best way is self-investment, to be less dependent upon others and better prepared for any financial disasters.


Nearly everyone right now is drawing in their horns, endeavouring not to spend money they don't have and worrying about the next twelve months and how to get through it. Cutting back on using the phone, buying own label brands in the supermarket, taking the bus rather than use the car... The current global financial crisis may be one of the worst on record but these types of crises occur regularly. Thinking and attitude across the world is changing in the light of the global recession and this is a good time to consider how can we make ourselves more independent of these moments to reduce their impact on our lives.

Cheap economics

The key is to not spend money! Sounds simple and it is. This is the easiest way to make sure what money you have goes further. Whilst you cannot avoid paying real money for many things, there are other methods where you can stop spending cash. Do it yourself, rather than hire someone to do it, exchange with neighbours / family / friends or simply do without that luxury item which caught your eye.

In reality, many of us need to go back to basic economics and practice the kind of old-fashioned values, frugality and respect of money which our parents did. I can remember my parents saving wrapping which parcels came in and even the string which held the thing together. I'm not advocating necessarily doing that but there are some basics which can dramatically improve your financial position and give a measure of protection during this financial crisis.. and the next one.

Literally millions across the world are living on credit cards, loans and mortgages. All of these are debt and mean that you could be spending more than 100% of your income. In Britain, there are an average of four credit cards to every adult with people consistently spending above what they earn every month.

Bulgarian society is predominantly cash-based and the majority of Bulgarians have no credit problems at all. Generally owning their own home with no mortgage, own their car if they have one, have no credit cards and no loans at the bank or elsewhere. It's time to take a leaf out of their book and recognise that cash is king. Credit cards only encourage over-spending, cash does not.

If you go to the supermarket with only 50 euros in your pocket, you will never spend more than what you have. Going with a credit card, you know you can pile your trolley high and just pay later. In a survey, experts found that people spend 20% more and that the average transaction doubles in price, if they are using a credit card compared with cash. Get rid of the cards.

Spending and earning make a complete circle and the less you spend, the less you have to earn. The old saying "take care of the pennies and the pounds will take care of themselves" is no truer adage. If you can cut back on your day to day spending, any money saved at the end of the month can go to clearing your credit card or other debts.

Cutting costs

When you next have a job or project to be done at your home, consider carefully whether you really need to pay someone else to do it. Remember, that when you pay someone else, you are not just paying for their time on that job but in what you are paying you are also contributing to their health benefits, insurance, travel costs, taxes, holiday plus their profit. Looking at it in this way, makes you think twice! Doing the job yourself may take you significantly longer but at least you will be contributing to your own home and family rather than someone else's.

Next time your mates ask you to come out for dinner at a restaurant, why not ask them to your place and cook the meal. Compared with eating out, food is actually only around 25% of the cost. You can buy a bottle of wine for the price of a single glass in a restaurant.

Shopping is the biggest area where cut-backs can be made. Going shopping just for sake of going shopping is to be avoided. This is when frivolous purchases are most likely to occur with spur of the moment buys. Where you shop plays a considerable part in all this. Even buying your fruit and vegetables at Billa will be hugely more expensive than buying them locally or at the market. If you use Billa by the way, don't forget to get a customer loyalty card to collect points and then cash these in against promo items which you want. This doesn't just apply to food either, it also means clothes, computers and everything else. We also have got into the habit of thinking that branded goods are better than own label. This is not strictly true and many own label brands are of excellent quality at a much lower price. Does your family really need to have expensive imported Heinz beans compared with the local Bulgarian brand?

Of course, free is the best of all. It is surprising what you can get for free if you look carefully. There are expat meet ups all over Bulgaria with car boot sales and cheap items on offer. When you get talking to other expats, many barters can take place. You'll be amazed what unwanted things they have that you might find useful in exchange for something you no longer need. Moreover, they may have skills which you don't and do some work for you in exchange for something else.

Much of this financial crisis could have been avoided if people did not believe they have a right to a 4 bedroom detached home in an area they want to live in, with two cars, kids in new Nike footwear and a second home overseas for holidays. There is no God-given right to this, it has to be worked for and paid for - not paid for on the never never. One has to add to this that the banks have certainly played their part in lending to people they should never have. Giving out 120% mortgages, mortgages over 50 year terms, letting people have a plethora of credit cards when their income simply doesn't stack up to repayments.

Self investment

Apart from cutting costs and watching spending, the best investment is in you. Learn new skills so that you don't have to pay others to work for you. Look after your home and if you have land, find new ways to grow produce. It is even possible to create your own power, water and heating systems. If becoming more self-sufficient isn't your thing, then still make the investment in yourself. Learn a skill which will  always be sought-after, even in times of economic difficulties. The less reliable on others you are, the easier it is to cope in times of crisis.

The current financial situation is bleak and nobody knows when it will turn round. For sure, it will, but then another financial crisis of less severe proportions will undoubtedly crop up again in the future. It is the moment for all of us to work out what we can do to make our lives more independent of financial ups and downs so that our family is better protected.