You don’t want to be cought with your pants down when the economy takes a turn for the worst. So, I’ve made a list of ways for you to avoid the financial drama all together. But, let’s start by breaking things down a bit.
What is a recession?
Whenever a country has decline in its gross domestic product or GDP for two quarters in a row, we call it a recession. So, it takes only 6 months to know when a recession is happening.
So, what can you do to stay financially secure during a recession?
It’s very important to do at least a few small things to mitigate the effects of a possible recession. Here’s a list of things you can start doing today, to protect yourself from a recession:
Have an emergency fund.
Really make sure you have an emergency fund. It’s the only way, you’re gonna get through six months of unforeseen circumstances. If you already have an emergency fund, guess what, you can never have too much financial security, so keep adding to it so you’re safe from a recession.
Have a side hustle or two.
If your job might be at risk, it’s essential that you have a plan B in motion. Don’t let your boss blindside you without a contingency plan in place.
The best side hustles to have are ones that are scalable to a full-time gig.
Sell off risky shares and buy bonds.
Don’t be caught holding the bag during a recession. Recession means, no one will be buying your shares. It’s also possible that companies you own shares in, might be wiped off the face of the earth, during a recession, so you want to make sure you tie lose ends before the recession even starts.
Pay off as much debt as possible.
You never know when you might need to turn to debt during an economic recession. The last thing you want during a recession is bad debt. You want to make sure you’re in the banks’ good graces so you don’t have to turn to loan sharks. Also, don’t turn to loan sharks, it’s not worth it. If push comes to shove, rather beg friends and family for money. Maybe even get a sugar daddy or sell feet pics, but don’t turn to loan sharks.
Don’t spend on non essentials.
A new eye-shadow palette, is definitely non essential during an economic recession.
Eating a nice restaurants is also nonessential. Home cooked meals can taste so much better than bland restaurant food.
Invest in income generating assets and products.
Make sure you have a laptop with a fast processor and graphics card, in case you need to make money from home. You could also buy your favourite crafting supplies, for when you feel like selling on Etsy. Sometimes a car is also an asset, if you plan on using it for business.
Have enough cash flow.
Cash flow is king. Even if spending all your cash on bulk goods sounds like a good idea, make sure to keep enough cash on hand, especially if you’re spending from your emergency fund money. Buy just what you need, and no more.
Buy investment pieces.
If you have a shopping addiction, rather buy investment pieces that you can sell in case of an emergency, but remember that when you’re desperate to sell, buyers might haggle you. Remember also, that when selling through consignment, you’re losing a percentage of equity each month the product doesn’t sell and you cannot take back the product. So, always sell your valuables independently, when it’s a sellers market.
Don’t get into any new and unnecessary financial commitments.
Definitely hold off on starting a beauty treatment course like laser hair removal, when an economic recession is looming. You can keep saving money in a beauty fund and when you have a nice nest egg, go and get the treatments you want.
Don’t buy products that you don’t know.
The last thing you want to do during an economic recession is to waste money on untested products. If brands want your custom, they can provide you with free samples.
Your say
What will you be doing to keep yourself and family safe from financial troubles this year?
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