Financial Crisis: “And How to Avoid It”
August 12, 2018

Financial Crisis: “And How to Avoid It”

How can a man avoid the financial crisis? How can a man be satisfied when he has more expenses then earning. When he know he has to pay large amount of bills and pay every month more for the same quantity of goods

Recently while conducting a session regarding self-satisfaction. A person stood up from crowd and made a statement. The statement for which I have to admit that it was one of cruel yet the honest one. “ You talk about satisfaction, avoiding stress and stuff. How can a man avoid the financial crisis? How can a man be satisfied when he has more expenses then earning. When he know he has to pay large amount of bills and pay every month more for the same goods as he knows there is no possibility of increment in his salary soon. How a middle class Paki can be satisfied?” Said the man.

I could see the frustration lying underneath his eyes, but did not want to initiate the fire of argument. I told him to meet after the session. We sat and I admitted to him that I have the same problems he is facing. It is due to the downward economic system in our society. But still there are certain things I am doing to lessen its impact and shared with him. The guy listened to me(with not too much signs of agreement). The guy left but given me one more important issue where we need to improve ourselves. Here you have some of the tips I discussed with him. I also want to thank him for giving me such a thoughtful topic.

  • Curtail Spending.

    Curtail Spending

The only thing you would do primarily to get out of the hole is that  you would stop digging it. So make it a decision right now that you are going to curtail your spending. First thing to do is that you make a track of your spending. You would see everything important when you think of it, so write it down write everything you normally do or pay for. Next segregate them as are they  important or not. Make any decision after that. One more thing is that make a log of your expenses. Write every expenses you incurred in a month with a date and reason. I personally make an excel sheet that helps me to relate and anticipate future expenditure by applying some relations and formula.


Write everything where your money is being spent. Now you have a track of your spending. It is time to avoid some. Some of the things to be cut off from the routine are eating out. Buying expensive books, coffees and snacks.  Spending on gadgetry, and home renovations and furniture. Please make it an important note that I am NOT saying to stop spending on these areas, but these are some of the thousands that are to be blame for your financial crises. They simply do it by making you feel good and drains your money out of your pocket, You will find out more of your useless spending once you would have list down your monthly spending It will be a much easier task for you to find the loop holes which you need to cap to lessen your spending.

  • Create an emergency fund.

Applying the first one, surely you have saved a bit of dim. Now make an emergency fund and put it in it. It must not be necessary to have a different bank account for your saving. Fighting with financial crisis is not a rocket science of accounting. You just need to remember how much you are saving. Other important way is to bind yourself to deposit a certain amount in your emergency fund. To keep you motivated Warren Buffet of Berkshire Hathaway Inc said “Don’t save what is left from spending, but spend what is left from saving”

Your savings don’t need to be bulking amount, make a small contribution in your emergency fund(but in regular basis). It will help you to stay away from the heap of credits and loans when you would be short of cash. You can utilize it instead of using your credit cards or asking for help from your friends or family. One thing more to consider is to make it sure where you are spending from your emergency fund is really an emergency expense or not.

  • Make debt elimination a priority.

Loans are one of the strongest horseman of the evil financial crisis.Once you have saved some cash in your emergency fund and you are fortunate enough you don’t meet with any extra expenditure. It is the best time to clear out your debts. If you are under many debts first schedule them all and decide which one to pay first. Take the biggest one first, when you pay it out go for next one. You can also choose the vice versa. If you have small amount that you are setting aside from each paycheck, go from the smallest and then for the larger one. Make it a must do habit on monthly basis. You can also set up an automatic payment option from your bank that certain amount would be directly transferred to your creditors.

  • Scaling back the life style.

As we discussed earlier about curtailing our spending. It was a short term goal to determine and differentiate between necessities and luxuries. Scaling back your lifestyle is a longer term version of the same activity. It obviously takes time because you need to make first your mindset for changing. Scaling back is not an activity, it is a series of decisions. Some times very conflicting decisions like you can trade from your 1300CC to 1000CC vehicle that will not only reduce your installments but also your fuel consumption and maintenance expenses. You can in some cases change your home from a larger one to smaller one. Other options are that you can also rent out a portion of it if you own it. You can focus on cooking food at home instead of eating out often.

Making your clothes last longer instead of buying new always. Changing the criteria of your parties and celebration events. Avoiding spending on home appliances and furniture.It is really easy to speak and think but when it comes for an step it is always harder. Have your mind with clear thought that you are not respected because what you have, you are respected because what you are. If some respects you for what you own you should not be respected by that person. Always remember no one would ever insult you due to having a modest lifestyle. But there is a great possibility that your lavish lifestyle may cause you financial crisis. So It is the right time to shout Hail modesty!


  • Buy only when you need.

Most of the people love shopping. I consider myself the lucky one(not talking about the mall)Buy-when-you-needbecause I hate shopping the most. That may be the one of the reason of my saving and my safe heaven from the curse of financial crisis. Definitely shopping is not a bad thing. You must do it. But before you go to market, bring one question with you, and raise it whenever you choose something. The magic question is: “Do you really need it?” If you do, go ahead and buy it. One other most important thing is to your habit to buy on cash rather than using your credit card. This simple act will save you from most of the expenses for which you regret latter.

Letting go the cash creates a feeling that automatically triggers the question of importance of the product you are getting against your cash. Half of your problems resolve automatically by a simple act. The other half for the future is solved when you would only buy when you would need it instead of impulse of buying it only and ending yourself standing under a heap of credit bill. It is always better to avoid credit cards as more as you can.Have only one credit card and only use it when you realize it as the most important use of it. Sharing a personal information with a caution: “Don’t laugh, Don’t wonder”. I Do Not have a credit card! And I am still alive.


Obviously you have your own arsenal to fight the war of financial war of your own. Share what you think is the most captivating weapon. Share your thoughts and you experience on overcoming your financial crisis.






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