How is your pocketbook affected?

Here is the basic definition of the factors you should consider to perform the analysis and evaluate in detail the impact and effects of a crisis on your finances.

Inflation: It is a generalized increase in the prices of goods and services and is the main cause of the loss of purchasing power of your money.

The best way to defend against inflation is to reduce your expenses, increase your savings and invest in assets that increase in price at an annual rate higher than inflation. For example, real estate often increases in price above inflation. In times of high inflation, it is not advisable to keep money in cash or "under the mattress".

Unemployment: During an economic crisis, the great risk for the population is that the lack of consumption resulting from the rise in prices may lead to a significant drop in jobs. Employers use the resource of reducing their production plant by the same percentage that their sales or budget have fallen.

A company's labor force can represent the largest percentage of its costs; for this reason, in the event of a considerable decrease in an organization's income, one of the first strategies to be employed is to reduce its workforce. The best way to face an unemployment situation is through an emergency fund that will cover two or three months of your basic expenses so that you will have more peace of mind to find another job.

Lack of credit: It is well known that credit or financing of productive projects is the engine of many healthy economies, but in the event of a crisis, capital financiers adopt a more conservative attitude towards credit requests, both from the general population and entrepreneurs.