The effects of a recession can take their toll on employment figures.
However, rather than focus on the doom and gloom – it’s time to think proactively and consider how you can take control of your finances during this bleak period. So if you’ve lost your job… or feel it may be under threat in the future – why not take this opportunity to put yourself in a healthier financial position?
According to research by the Jump Start Coalition, the average high school student could only answer 48.3 per cent of questions relating to personal finance correctly – down from more than 57 per cent a decade earlier. It’s not just teenagers that are failing the basics of personal finance – with more than a quarter of adults also failing the quiz, with women far more likely than men to score an “F” on the test.
Of course few of us have the time, or the will, to learn all of the ins and outs of economics and personal finance. However, there are some bare basics that everyone should know and that can help repair the damages of unexpected events, such as job losses, that much faster.
Needs and wants
The first basic step with personal finance is to be able to separate your needs and your wants. Needs are actually fairly basic: shelter; food; clothing; and companionship. In financial terms this will mean keeping a roof over our heads – in the form of paying a mortgage/rent; keeping ourselves fed and clothed; and keeping our living space “liveable” – such as by covering the costs of utilities.
Everything else can generally be considered a “want” – such as paying for nights out; television and other forms of entertainment; the internet (assuming you don’t need it as part of your job); club memberships; magazines and newspapers; etc.
Being able to separate our needs and wants is vital when making decisions about how we can cut back and potentially save money. Scarcity often makes these choices for us – while we all love to live in a world of abundance, the reality is our resources have limits and these can be tested at any time. So it’s much better to plan ahead.
This is the first part of a three part guide to personal finance – with the following parts to be published at money saving website Moneysaver.ie over the next two months.