Should You Be Financially Conservative? Recession Proof in 2023

There is no one-size-fits-all when it comes to financial advice. People have varying financial risk acceptance. Others are risk-averse, while some people are risk-takers.

Risk Takers vs. Risk--Averse in Personal Finance

The risk-takers in finance are those who accept the high risk of losing the value of their investments.

They accept this risk due to their optimism of getting better value appreciation for their portfolio. In other words, they believe that they will benefit later on from the risks they take right now.

Risk-averse individuals are those who are financially conservative. These people do not want to lose all their hard-earned money and prefer low-risk financial investments.

In a household, financially conservative people make calculated decisions with their finances. They prefer expenses that focus on needs.

They usually frown upon expenses for wants and understand that money should use money wisely.

It is okay to be a financially conservative individual. It showcases your understanding of the difficulty of earning money for a living, and it simply shows you are careful with and appreciate your financial resources.

Tips for Financially Conservative Individuals

Here are some tips to help you protect your hard-earned money from impulse spending:

Determine a Specific Reason

One of the toxic personal finance moves is on-the-spot spending. Impulse spending is the immediate purchase of something you just saw a moment ago.

Having a reason for an expense before making a purchase helps prevent impulse spending.

Have you noticed that when you go grocery shopping when you’re hungry, you spend way more money than if you had gone in with a specific list of items to buy?

Prioritize Your Needs

Breadwinners understand the hardships of money. However, they might overindulge in themselves without thinking of their priorities.

It is okay to reward yourself with your hard-earned money. However, ensure you prioritize family needs before you buy that new phone, a first-class flight, or a trip to Maui with the girls.

Set Realistic Budgets

Some people might find the idea of budgeting simple. However, it is not only writing your income on one side of a paper and your expenses on the other.

Your budget should be realistic. Do not write a budget for your monthly bills strictly based on your previous month’s expenses.

There is a chance that it might increase due to additional necessary expenses. Allow some flexibility now and then.

Be Flexible with Your Coins

In a realistic perception, there are countless times when you encounter a dilemma between your wants and needs.

Ideally, people choose needs over wants. However, it might not be healthy to go with this decision.

To prevent a conflict, devise a solution where you get the best of both worlds.

Live in the Moment But Think About The Future

Personal finance does not skip the relevance of enjoyment of your hard-earned cash and includes a small portion of it in your budget.

However, ensure you look at those expenses with the future in mind. Imagine the lost investment opportunities with your current budget for enjoyment.

Do not eliminate your budget for enjoyment, and set it in a way that you enjoy life without hurting your future.

If you want to go on girls or guys trips, plan for that. Please don’t cut it off because it’s not in the budget. If you really want to go, move things around and find a way.

Budgets don’t have to be so restrictive, especially at the expense of having fun.

That’s what life is all about balance, baby!

Live and Learn

Money management is a continuous learning process. One of the best teachers is a mistake.

Do not give up. Instead, use it as a guide for your future adventure in personal finance.

Life lessons serve us if we genuinely allow them to teach us.