When is the next financial crisis? 4 action steps to prepare in advance.

When is the next financial crisis coming? Try googling and you will have many predictions. Some of it may just come true. If the question is aimed at someone with a business degree and an MBA as well as 23 years of working experience, his answer is, “No idea.” Yes, that person is me. However, my answer is to be prepared. Better be focused on preparing for the next crisis instead which no one could predict with accuracy.

ASEAN Financial Crisis

When the ASEAN financial crisis arrived in 1997, the unemployment suddenly shot up from 2.45% in 1997 to 3.2% in 1998. This is still much lower than March 2021 unemployment which is 4.7%. Image for unemployment over the years as below. Source: theglobaleconomy.com However, this was a sudden increase of 31% of people without a job! Are we ready if we happened to be within the statistics?

Before we face the possibility of losing our job, prepare for it with the 4 things we could do below.

#1 – Do we already have savings? How long could we survive financially if we do not have salary when we do not have a job? Typical advice most personal finance people will give is that we should have at least 6 months of savings in our Fixed Deposit account. This is just in case we lose jobs and we needed time to find the next one. We have 6 months to do so and not fall into financial difficulty because even when salary stops, we still have bills to pay. So, do you already have 6 months saved under FD?

Once upon a time, I was down to my last RM50 and it was final 7 days before salary and I even needed to pump petrol for my car before then. I was feeling so unsafe! Just get to know that when you lose your job and all the bills start coming in, the feeling is much worse.

#2 – Do we have side incomes currently? Do we know of some job opportunities which we could do on a part-time and continuous basis? It does not matter if it gives much lower pay than our main job. Question is, do we have that option for some funds if we lost our job today. This could be tuition teacher 3 nights out of 7 days in a week. This could be driving GRAB during the weekends. This could also be part-time accounting clerk with a few small SMEs who does not need full-time staffs. It could even be baking delicious cakes. Have we started? Are we starting soon? Or we still think that we will only start doing when the income stops?

#3 – Are we stretched too thin? Look at how much we are paying every month for everything. Start deciding what is not necessary. RM500 every month on online shopping may not be necessary. What could be lowered. Frankly, second-hand car works fine too and it does not need to be some new and fancy car. How much are we paying for our home? Do not buy a home where the repayment is so high that we face a possibility to miss it if we have any unforeseen expenses. If it’s a rented place, could we rent a cheaper place? Savings of RM200 per month is still a savings of RM2,400 per year. This will be handy when we are struggling to look for the next job.

#4 – Are we OVERPAID? This is a serious question yeah. Did we do the exact same thing as last year and yet being paid higher this year. Look around us. Are there junior people in the organisation who would be able to do what we do currently at a lower pay…? Look around the industry, is the company the only one paying much higher than industry because they are market leader? Please remember yeah, if competitors caught up, the next company will not pay the same salary as what we are getting from this current company which is overpaying us, actually. Do an objective assessment and if we are, please upskill ourselves. No one knows when they time will come.

No one knows what tomorrow holds

It’s not easy but we still have to start somewhere. A journey of a thousand miles as they say will usually start with the first step. We cannot change the wind but we can adjust our sail. In Malay, it’s Hendak Seribu Daya, Tidak Seribu Dalih. The choice is yours. Happy choosing but more importantly, take the first action.

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