Are You Prepared for the Next Big Recession? Here Are a Few Tips to Get You Ready

Advisor September 4, 2019

If the economy were to be hit by a financial crisis that eventually leads to recession, how wrong-footed would the eventuality find you? In all honesty, you wouldn’t be the only one on the wrong side of this.

Although we may pride ourselves in being good with money, the one thing most of us never prepare for is a recession. Up until reading this, when is the last time the term financial crisis ever crossed your mind? Probably never.

Not Comfortable Enough

You may be leading a comfortable life, but if you live paycheck to paycheck, that’s not comfortable enough. What is your contingency plan in case you lose your job? And that’s exactly the point here.

The country’s economy may be doing okay, but your world may be thrown into a financial crisis without notice. Worst case scenario, you could lose your job thanks to a failing economy.

Living from paycheck to paycheck is hardly comfortable

So, how do you prepare for this, even if there are no signs of it happening? First, you need to replenish your emergency savings account. That bulb that has just flickered in your mind is the realization that you haven’t contributed to it in a while. Start now and make a habit of it, preferably contributing to the account on a monthly basis.

According to financial experts, the perfect emergency savings account is one that can support you for at least three months while you’re out of a job. Can yours do that for you? If not, you know now what you must do.

Are you in any debt? Now is as good a time as any other to cut down the amount you owe your creditor. To do this, assess your monthly spending and figure out what expenses you can do without. Cut them out, then use that extra money to rid yourself of debt. And while assessing your expenses, make a point of also noting what expenses you’d have to cut out in the event that you lose your job.

Be A Cautious Spender

In truth, being a cautious spender could go a long way in helping you out, not necessarily in the event of a recession. Say the economy keeps growing, and you cut down your expenses to increase your savings to the tune of college fees, emergency funds, retirement savings, or even investments. When time comes to reap what you sowed, you won’t even remember what you had to sacrifice to get here.

Being a cautious spender could help you out in the long run

One other important recession-ready tip is networking. According to Caroline Ceniza-Levine, a career expert, most employers hardly jump at the idea of hiring a total stranger in times of recession. They rely on referrals, so make sure you have individuals in your line of work that can vouch for you.

While at it, make sure your resume paints a clear picture of who you are and what you bring to the table. Coupled with a recommendation from a trusted source, potential employers would be hard-pressed not to hire you, no matter the state of the economy.

With a good recommendation, employers will have no reason not to hire you

Remember those investments we mentioned in passing? Financial experts say that there’s actually a lot more that goes into where you decide to invest. Do jump headfirst into any other opportunity you hear about, lest you lose everything you’ve worked for so far. Do your due diligence.