I’ve been trying to earn some extra money in a few ways lately. I appreciate every one of my side ventures, and I have a plan and goal in mind for building them up into something legitimate. However, sometimes they don’t always work out. A lot of things don’t work out, and you may have experienced this recently in your own life.
I’ve begun trading stock options as one of my various financial outlets, and let me tell you, I’m bad at it. If you want to lose money quickly, that is one great way to do it. If you start trading, you’ll learn about something called implied volatility. Now, I’m not here to give you a workshop on options trading. Honestly, that would be a very bad idea, since I’m very bad at it. Instead, I want to talk to you about two opposing concepts.
In options trading, volatility is the movement of a stock price and the amount of trades that are occurring. If something is swinging up and down rapidly, there is high volatility. If it is pretty consistent, there is low volatility. Now, you have a higher reward potential with a high volatility, but there is intrinsically more risk.
This is a great analogy for life. How many of us have seen more volatility in our lives recently? When Coronavirus caused most American businesses to shutter their doors, the stock market went crazy and millions of people lost their jobs. That is volatility. When volatility enters the arena, the risk jumps up rapidly.
Now, the opposite of volatility is consistency. In December, things were relatively consistent. Jobs were normal, businesses were open, things kept plugging along as expected. Consistency is comfort.
However, in our environment, consistency can breed complacency. While we plodded along with our jobs and assumed the economy would continue burgeoning for years to come, our lack of preparation brought us to our knees soon thereafter. Because of this, consistency, which is a great thing, caused us harm.
The harsh truth is that consistency is temporary. Times will change, and they will often change soon. You can look at that this week. Suddenly, as the world opened up, the stock market abruptly righted itself, back to cancelling out the negative returns in record time. But, as soon as fears of a second wave occurred, the world was back on its knees, and things are dropping around us again.
Volatility is a fact of life – we will never be able to control the change that surrounds us. However, inside that risk, there is great reward. Companies like Zoom and Amazon are using this period of unprecedented home life to boost their bottom line, and the intelligent businesses are the ones that are taking advantage of the changes and using it to propel them forward.
Some of the great tycoons of the early 1900’s used the Great Depression as a way to get ahead in business, because they had enough liquid capital to buy up cheap stocks and overtake businesses and competitors. In that way, they used volatility to their advantage and won the day. Here’s the thing – volatility doesn’t have to be an enemy. It can change our course, certainly, but it doesn’t have to ruin us.
How to Thrive in Volatile Times
Here’s the secret. If you want to overcome external volatility, you have to develop internal consistency. I’m a finance blogger, so I’ll talk about the economic side of things, but this relates to depression, anxiety, cooking, fitness, and so many other things.
Consistency in your personal life will help you weather the storm, and is, in fact, the way most successful people have built their lives. Warren Buffet has been investing since he was a teenager. His consistent, frugal lifestyle and analysis of companies, as well as his insistence on continuing to invest his capital in the stock market, has made him one of the wealthiest people to ever walk the Earth.
He is quoted as saying “people don’t follow my principles because they don’t want to get rich slowly”, but it’s a sad state of reality. Consistency is a slow path to success, slower than becoming an internet sensation or creating a booming business. But it is still a path to success, and it is one of the most realistic paths to it. Beyond just creating wealth, consistency will make you recession-proof and financially sound better than anything else. But what does consistency look like?
Consistency in Volatility
In the midst of all this craziness, consistency is simply doing the right thing over and over even though it is difficult. You all know the easy things and the hard things to accomplish. It’s very easy to eat McDonald’s for dinner every time, or to watch Netflix all evening long. It’s harder to do things that make a small impact on you every day.
What is consistency in these trying times? There are a couple of main things you should be doing to keep up with good habits and keep the recession away from your household.
- Maintain a Budget – Always maintain a good budget. It may actually be easier to do this currently because you’re not driving to work as often and you may find it harder to eat out. But always keep your budget at the front of your mind during this time. If you don’t have a budget, build one today from these guidelines.
- Build Savings or Investments – Not everyone wants to invest in the stock market, and that’s fine. I would advocate it to anyone who wants to grow their wealth, but today’s blog is not about that. Regardless of your chosen investment or saving vehicle, add to it. If you can squeeze your budget anymore to save more – do it. That way, you’ll have more money for essentials if things get tighter, and you’ll be living leaner, allowing you to save even more money when things return to normal.
- Develop Extra Income – Seriously. I will beat this into your heads as long as I have breath. Build up additional income streams so that you can always have additional money and a fallback for when things get back. I’ve already discussed here how having a backup income stream helped me out when the Coronavirus pandemic took my job. Don’t be caught without an umbrella. Even if you don’t need it, you’ll have extra income, which is a great benefit anyway you look at it.
The Next Step
So how do you get started? Take a look at those three things and start figuring it out. You have the ability to build your budget, you can add to savings however you plan, and you can start earning extra income.
Even better, if you’re interested, I have published my Crash Course on getting started as a freelance writer so you can start earning money. If you’re serious about it, you can start making money this same week, and your earning potential is contingent only on your own effort – a great benefit in today’s economy.
Take a look at my Crash Course here and get started on a new side hustle or even a new career!