Four Chicken Thighs!!!

I notice when prices of items go up and when companies reduce product sizes for the same price, but it was still a surprise to me when I looked at my grocery bill yesterday and saw that a packet of four chicken thighs cost £5.30 at my local Supermarket. Chicken thighs are cheaper than chicken breasts but they lend themselves better to certain recipes so I often buy them.

Utility bills are astronomically high and rents are up by as much as 26% in some areas. Sadly wages can’t go up by that much for majority of workers as it’s not affordable for most employers to match the rise. This is a sign of the times we are living in and not just a United Kingdom story; this is the same thread from conversations with people from around the world.

Another global recession is looming with the worst of it yet to hit. Cost of living is already on the rise, interest rates increase will be on the cards but some other things will crash at this time as we’ve seen with the crypto market. The stock market isn’t doing that well too.

I was talking to an Industry expert yesterday and the person said something that struck me and made me want to sound the alarm. They said, ‘this is the time when the rich will get richer and the poor are going to end up poorer unless they do something different.’

I often hear phrases like, ‘there will be a wealth transfer from X to Y’ but the truth is that wealth transfers only happen in the direction of those that have the understanding of the times and know what to do about it. It doesn’t happen by magic, wishing, declaring, visualizing or whatever else people are saying that is ‘non-action’ related.

Wealth transfers happen when we are EQUIPPED to take action and we TAKE action.

To keep it simple, during a recession the cost of investments go down and that is when ‘the rich’ invest. At the same time interests rates will likely rise making the cost of borrowing more expensive and job losses are sometimes inevitable.

So how does the wealth transfer happen? It happens because people who have money saved up use it to buy investments ‘at cheaper costs’, ready to sell when the market bounces back.

During the 2008 financial crash, like many people, I lost money because for years I had taken my bonus and profit shares in stocks rather than cash which seemed prudent. The financial crash made me think otherwise but I also saw the importance of readiness to invest.

I had some savings and a particular stock crashed to 10p so I bought 30,000 shares for £3000. By the time the stocks bounced back it went up to £6 per share before settling below that amount. I sold the shares when I needed to and recouped my losses. I was prepared to buy because I listened to an alarm that was sounded and had some savings that I could invest.

There are some things that we must do NOW!

Spend less

Curb your expenses now. This is the time to conserve money. Delay non-essential spends, look for cheaper holidays, reduce reliance on overdrafts and find cheaper ways to shop. Avoid impulse and emotional buying and spending decisions.  

We all know the things that drain our money so analyse your spending and see where you might need to cut back.  

Earn more

If you have a way to earn more money, this is the time to do so. This can be taking on extra shifts or selling unwanted things or those impulse purchases that you never really needed. It is better to sell them and recoup some of the money you spent. Perhaps you have a marketable skill that you haven’t deployed.

Save more

It is not easy to save at a time when prices are on the rise but the times demand it. Food costs and wastes are high so pay closer attention to how much of your food money ends up in the bin. Plan your groceries shopping to reduce wastage. How much of your water, gas and electricity end up in the bin? Just because you don’t see it doesn’t mean it’s not being wasted.

Your first goal is to save money so it is available for you as a buffer during the recession. The next goal is to have some more left to invest at the height of the recession. This will make you one of the gainers in the recession.

Remember, having more understanding is an achievement, so is being better prepared to weather the storm and investing is further achievement. The wealth transfer will happen as we take these steps. Don’t beat yourself up if you can’t invest in this cycle; start to get ready for future recessions because they are cyclical.

Remember anyone you are planning to fall back on during a recession is likely going through similar challenges regardless of the part of the world they reside in. Thanks for reading and sharing my post. Have a wonderful and productive week.