5 Tips To Prepare For Recession
You’ve navigated through an unimaginable global pandemic;
you’ve experienced inflated prices.
Are you prepared for a possible recession?
Here are 5 tips to make sure that you will not only survive, but thrive during a recession.
Tip # 1 is that it’s critical to be aware of what you’re spending compared to your income. Your income and your expenses are obviously the foundations on which the management of your finances are built. When considering the rising prices of everyday necessities like gas, food, and housing, you need to find ways of increasing your income to continue to increase the buffer or cushion between your income and your expenses. Maintaining more income in relation to your expenses will give you the peace of mind of having disposable income. This is the money you have left over after your mandatory expenses like rent, utilities, phone, insurance, etc. are met. How do you increase your income? This depends on your talents and skills and the effort you put into creative ways of turning them into cash. It also depends on your willingness and ability to learn new skills and ways of making money.
Tip # 2 Realistically, it comes down to our second tip, which is to have a savings plan. Dr. Preston Cherry, a financial wellness professor at the University of Wisconsin-Green Bay says, “The beauty of creating a plan is that you win when things go well and you win when things don’t go well”. This is all fact! Let’s say you are building a savings fund for a recession or an emergency. If that negative event never happens, and the danger is past, you have accumulated a pile of funds that you can tap for anything you want! Now if things do unfortunately go wrong, you’re covered because you took the time to prepare. Whenever you have a plan, in a time of need it creates confidence and peace of mind while eliminating the feelings of stress and anxiety. Wouldn’t you rather put in a little extra work to make sure that no matter what happens, you’ll come out on top? That seems worth it to me.
Tip # 3 The third tip is to build relationships with those who share your values. As humans, we’re made to connect and congregate, and that’s why COVID was so hard—everyone was isolated. So, find a group or community that has the same goals as you. Whether that’s a goal of building generational wealth, building a strong community, or protecting and providing for our families, seek these people out as you never know where it can lead or the true impact it will have on your life.
Tip # 4 Tip number four is to establish an emergency fund. Brandon of Worth-Life Balance, a self-proclaimed “regular millionaire,” states, “The worst time to do emergency planning is in the middle of an emergency!” I like to call this a “peace of mind fund.” Calling it a “rainy day” fund or “emergency” fund brings negative vibes and we don’t like that! Hearing the word “emergency” can make you automatically feel panicked, anxious, and worried. A peace of mind fund is a set amount of money that you build for when – not if, but when – something unexpected happens. This is so beneficial because having money to fall back on is literally what creates peace of mind! In the past, experts usually recommended three to six months of your expenses saved up. Considering what we have been through with COVID-19 and the multi-year pandemic, we recommend at least six to twelve months of savings!
Tip # 5 The fifth tip is to open a high-yield savings account (HYSA). This account is literally the same as a regular savings account, but you get more bang for your buck! You’ll get paid more interest than a regular savings account because most of the time these high-yield accounts are online only. This means that they can avoid the major expense of having an in-person location and are able to pass those savings along to you in the form of higher interest, which means more return on your money.
I hope these tips help you thrive during any recession.
