The economy is in a constant state of flux. With all of the highs come inevitable lows, and economists are warning of a recession in the coming years. This is due to some increasing instability in the stock market and tenuous gains within the job market. It’s not an if, but when scenario at this point. So, what can you do now to help recession-proof your finances and successfully plan for your future? Check out the list below for some of the most practical tips on how to do just that.
This can seem like a no brainer, but it’s harder than it sounds. The ideal situation heading into a recession would be to be completely out of debt, but that isn’t always a feasible option. At the very least, you can consolidate by checking out any consumer credit agencies that offer minimal cost consolidation services. Another viable route is to consider companies that offer small loans with free financial counseling. These loans can be used to consolidate things such as medical bills or several minimal credit cards so you can have only one payment per month. And, with the additional counseling, you can begin to plan better for your future.
Another important step in recession-proofing your finances is to find out where your money is going and how it is being spent. To do that, you need to have an in-depth understanding of all your expenses and then create (and stick to) a reasonable budget. Make sure your budget is attainable, but also honest. From there, you can adjust expenditures and start paying off more of your debt. If organisation is not your strongest suit, there are numerous budgeting apps available that will help you track every dollar you spend. Whatever method you choose, after a couple of months you should have sufficient data to review your outgoings and determine what if any areas can be cut or reduced. Eliminating extraneous spending can be a powerful way to preserve your cash in tight economic times.
Save! Save! Save!
Not only do you need your emergency fund full, but you also need to keep putting away money in a long term savings account. This money can be used for investments or short term CDs to help increase your monetary gains without jeopardizing your emergency savings. Every dollar saved or invested puts you a step closer to financial stability.
Review your assets
Investing is a great way to build long-term wealth and financial stability. With the range of investment options available, you don’t have to be a millionaire to get your money working for you. If you have assets such as a car, a home, or a business, it’s a good idea to review these and ascertain whether they are delivering the best financial outcome. Is there more equity in your home? Could you qualify for a lower interest rate now if you refinanced? What stocks are risky and which ones are stable? Should you look for a second investment property in the residential market, or perhaps you have your eye on a commercial property for sale in a booming area? Research all your options and make sure that you diversify your portfolio as much as your budget will allow.
The Right Advice
If some of these steps appear a little daunting and you’re not sure where to start or which direction to take, perhaps it’s time to call in the help of a professional. Even seasoned investors rely on the professional advice of financial planners to help them navigate the sometimes confusing world of wealth-building strategies. The key here is to find an advisor with whom you share a strong rapport and that deeply understands your goals, objectives and limitations. While some people may baulk at the cost of obtaining professional financial advice, sound guidance can deliver return many times larger than its cost. Remember, you wouldn’t marry the first person you ever dated, and nor should you hitch your wagon to the first advisor with who you speak. In this area, it pays to play the field until you locate your perfect match.
When a recession occurs, jobs are often threatened. Regardless of where you work and how you make money now, that income may not be available to you in a few years. Always keep your résumé updated and continue to connect with people in your industry and community. You never know when you will need supplemental income or even need to start a new career altogether. Options and connections help keep you in the workforce and generating income.
Choose to put one or all of these tips into action to help you prepare for the lows of an economic recession. And, regardless of what you choose to do, make sure you stick to the plan that you have set in place for when a recession does occur.