All of 2015 has seen huge changes in the Oil industry in the North East, most of it very unpleasant. A massive fall in the price per barrel has seen drastic cuts in personnel and overheads. At the time of writing no-one can with any degree of confidence tell us when the price will bounce back or indeed if the price will bounce back, but on the assumption that we achieve say $80 a barrel what needs to be done to sustain business and standards of living?
In our view everyone must take personal responsibility for their own business and their own personal finances. “Shouldn’t they have been doing so already?” I hear you ask. Let’s not go over history let’s talk about the future. It would not be unreasonable to say that many people spent up to their earning levels and assumed that the industry would sustain through their careers. That myth has been blown away, so how would we deal with a “fresh start”?
First and foremost assume that there will be future downturns. There will be. Secondly, retain 15%-20% of post-tax earnings. That way you can build reserves to sustain you through future lean times. Thirdly, consider diversification so that you can have more than one income stream, be that other types of work or income from investments.
Very simple actions to take, but ones which might mean you can maintain lifestyle and not have to consider selling the family home and downsizing just to survive.