Every now and then, an economic downturn happens, It's part of the market cycles. A stark example is the Great Financial Crisis . During this times, money seems hard to come by and inflation skyrocketing doesn't help a bit. Now, we have to spend more money than before to cover expenses.
What do you do? Do you cut costs so that the amount of income you earn is able to fit exactly with your expenses? Or do you think of increasing your income so that you can stay afloat of your expenses. Do you do both?
Source
In this post, I'll be sharing my perspective on them based on experience and personal observation.
Economic downturns doesn't always bring about this decision. Sometimes it could be a change in life situation, picking up more responsibilities for example.
Reaching The Limit
At first, cutting costs can be a great relief, you've offloaded some of the pressure off your pocket and able to live 'within the box'. However, there will come a point where you'll reach the limit because nothing is left to cut back on. Your back is already against the wall and you can't keep on 'retreating' forever, can you?Anyhow, cutting costs is only a temporary solution. Things don't necessarily get better over time, in most cases, they get worse. Eventually, you'll come to realise that we live in an expensive world and trying to be cheap can become very costly in the long run.
The Upside
Earning more seems to be the harder choice between the two because it requires stepping out of your comfort zone and exploring uncharted lands. This is a daunting task in the beginning but it has more upside in terms of rewards.You get to grab new skills, make new connections and there's more cash flow around at the end of the day. You get to be on top of the curve rather than being crushed by it.
It Depends
It might take some time before you reap the rewards for making the decision to earn more so if you haven't been cutting cost, you'll probably get crushed before it starts raining money. In my opinion, the best choice will be doing both. While you're retreating towards the limit, you're also building the systems that'll catapult you to new heights where you'll be able to stay ahead of the curve.
What do you think? Forget about cutting cost and just focus on earning more or temporarily forget about earning more and just focus on cutting cost? Do both at the same time?
Thanks for reading, I appreciate your support!
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