The global economy ebbs and flows. While you can never be sure when it will happen, a recession can occur at any time. If it occurs, activity within the economy decreases, resulting in slowed production, fewer jobs, and less stimulation from consumers and businesses.
While those with sizable incomes and assets may weather the storm, the average person and their families will struggle to survive. If you fall into the latter category and fear a recession is near, there are things you can do to prepare.
Stop Accruing Debt
When you’re strapped for cash, it’s tempting to want to turn to loans and credit cards to tide you over. However, in an uncertain economy, you have no idea if you’ll be able to repay these debts.
If you don’t, you are looking at increased expenses, ruined credit, and potentially having your assets repossessed. Therefore, it’s a good idea to steer clear of debt. If you have the means, you may even consider paying off existing debt to free up cash for the future.
Avoid Unnecessary Spending
While it’s nice to treat yourself and your family occasionally, it takes away from money you may need if a recession occurs. It’s important to start making conscious decisions about spending.
Review credit card bills, bank statements, and receipts to see where most of your money goes (after covering necessities).
Some unnecessary everyday expenses may include streaming services, social outings, shopping, travel, multiple vehicles, and other sources of leisure and entertainment.
Build Your Savings
As you start paying down debts and reducing unnecessary spending, you’ll find that you have extra money. Instead of spending it haphazardly, you should place the cash in savings.
Ideally, you want at least three to six months’ worth of expenses in an account. That way, if you lose your job, the cost of living skyrockets, or you experience a financial emergency, you have the money available.
Banks like ONE offer 1.00% APY, enabling you to see a return on investment faster than traditional banks and credit unions.
You can also sign up for their Auto-Save feature, which rounds transactions to the nearest dollar and puts the change in a sub-account that earns 3.00% APY.
Capitalize On Earnings Opportunities
In a recession, finding employment or sustaining a business can be challenging. Therefore, you should take advantage of your time to generate as much income as possible. You’d be surprised how much people make in their spare time.
You can become a freelance writer, start a blog, design websites, tutor, teach a foreign language, sell eBooks, promote products and services, write reviews, play games, manage social media accounts, become an influencer, sell images, or start your own eStore.
Create A Plan For The Worst
The hope is that a recession doesn’t occur, but nobody has control over the outcome of the global economy. The most practical solution is to prepare a plan for survival if things do get worse.
Creating a list of steps or solutions to follow is helpful. A plan will provide peace of mind and assist you in getting through the worst recession, should it happen.
It’s never fun to think about a recession but it’s important to prepare for one if it does happen. Start taking finance steps today to safeguard yourself and your family.