Becoming Recession Proof

There are certain things we can’t control, such as a recession; however, we can prepare to put ourselves in the best position possible. Read on for our guide to becoming recession-proof.

Budget

Establishing a budget and saving money is important because it helps you evaluate your lifestyle and live within your means. Evaluating your budget should be normal practice, whether it is weekly, biweekly, monthly, or annually. Make sure you’re not overspending in certain areas or wasting money. Eliminate unused subscriptions and find suitable alternatives to your usual expenses. When it comes to money, it’s better to have it and not need it, than to need it and not have it, so don’t be afraid to live within your means. Living within your means allows you to take care of business and still have funds left. Doing these few things will allow you to save and invest your money.

Keeping Credit High

Paying your bills on time, lowering overall outstanding debt, keeping a lengthy positive credit history, and having a low debt-to-available-credit ratio all helps keep your credit healthy. Keeping your credit healthy is important so if times are a bit tougher, your credit is strong enough for you to get approved for mortgages, other credit cards, and loans.

Additional Income

Picking up side gigs, hosting garage sales, and selling items on online markets (eBay, Facebook Marketplace, etc.) are all options to earn some additional income. Possessions you no longer have use for — or have never used — can be turned into cash. You could turn reselling into a legitimate business depending on your success and quality of items. There are also sites online that offer gig jobs for people to pick up, which is a valuable option for additional income. Other side gigs include Door Dash, Uber, Lyft, and Shipt.

Investing

Establishing your risk, diversifying your portfolio, and investing for the long term is good practice. Following these steps will allow you to mitigate losses during an economic downturn, but it’s important to note you haven’t lost anything unless you decide to sell your assets.

Emergency Fund

In addition to budgeting, having an emergency fund is important. Make saving for an emergency fund part of your budget. Depending on your income, having a fund that can supplement your income for three months to a year can be an important cushion in the case of job loss, which is possible during a recession.

There are more ways to secure your financial well-being during a recession, but these steps are a good start.

Sources:

https://www.investopedia.com/articles/pf/08/recession-proof-your-life.asp