5 Simple Steps to Take to Be Recession Ready

The man looking out the window

Image source: Getty Images

Don’t go into an economic downturn unprepared.

Key points

  • Many experts predict a recession in the coming months.
  • There are five steps you can take to prepare for the fall, starting with saving more money and improving your work skills.

Many financial experts warn of the coming recession, that is, a period of prolonged economic crisis characterized by slow growth and high unemployment rates. You don’t want to go into a recession unprepared, so there are five steps you should start taking right away to be prepared in case your business or finances take a hit.

1. Save more money for emergencies

Whether you already have an emergency fund or not, it might be time to put some extra cash away for a rainy day because recessions tend to increase the chances of that day coming.

You don’t want to be left unable to pay your bills if a recession affects your business, nor do you want to have to go into debt, as lenders often tighten credit standards during recessions. Interest rates may be higher as the Federal Reserve raises rates.

Traditionally, the advice was to save three to six months of life. Many financial experts, including Suze Orman, now suggest putting even more into a high-yield savings account. It is wise to heed this advice in the event of a recession.

2. Start improving your skills

A recession usually means that the unemployment rate rises as companies let people go due to slow growth and reduced demand. You want to make sure that you are indispensable to your employer to reduce the chances that your job will be in jeopardy. You’ll also want to make sure you have a solid resume in case you need to look for work during a tough time in the economy.

So start working on improving your employability now. If your company offers training, take it. Otherwise, look for other options to develop your professional talents.

3. Take networking seriously

You don’t want to wait until you lose your job to try to start building a professional network. Make connections now before you need them – and even see if you can help people if you’re employed and others are looking for work.

You can build a solid network both online and through in-person professional groups. And if you find your job eliminated, you’ll have plenty of people to turn to who can help you find a new position quickly.

4. Pay off debt to lower your monthly bills

If you can reduce the amount of money you owe, you won’t have to worry about making as many large monthly payments. This can make it easier to survive the recession even if your income is reduced.

MORE: How to pay off debt

5. Check the distribution of funds

Finally, you’ll want to take a close look at your investments. It is a bad idea to stop investing during a recession or sell an asset at a loss just because it has started to decline due to current economic conditions. A recovery usually follows a market decline and it is best to stay the course.

However, you don’t want to be exposed to too much risk given your age and investment time frame. So make sure you have the right mix of funds considering how quickly you will need the money. Anything you’ll need in about two to five years should probably be saved, not invested.

By taking these five simple steps, you can make sure you’re prepared if a recession hits.

Warning: The biggest cashback card we’ve seen now has 0% introductory APRs through 2024.

If you use the wrong credit or debit card, it could cost you seriously. Our expert loves this top pick, which has an introductory APR of 0% until 2024, an insane cash back rate of up to 5%, and all with somehow no annual fee.

In fact, this card is so good that our expert even uses it personally. Click here to read our full review for free and sign up in just 2 minutes.

Read our free review

Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button