Is a recession coming soon? What can I do to safeguard my loved ones and myself during a recession? I bet a majority of you have had questions much the same as the ones above. Here is something that you can be sure of: A recession, though unpredictable, is not a matter of ‘if’ but ‘when’. While one cannot know for certain when a recession will hit, it would be foolish not to be prepared.
You might find yourself asking, “What can I do to protect myself during a recession?”. The answer is making the necessary preparations. The following is a list of suggested steps that you can undertake to help fortify your financial position for a recession.
Having Sufficient Savings
Considering that the unemployment rate more than doubled during the previous recession, there is a fair chance that you may lose your job. Having sufficient savings to cover your expenses is crucial to getting by during these tough times. With the median duration of unemployment in the previous recession lasting 25.2 weeks, a recommended sum to target for would be about 6-7 months worth of expenses. This can come in handy, especially so if you find yourself unable to find a new job during the economic downturn.
Cutting Down on Expenses
One way to stretch your savings is by coming up with a strict budget to abide by. Try to cut down on unnecessary expenditures – your daily Starbucks, eating outside, takeaways and wasteful subscriptions. Cutting down on these expenses even before a recession can be really beneficial to you in the long run as you find yourself with a higher degree of financial freedom. However, many of you may not have had to come up with a budget before and these drastic lifestyle changes can be difficult to stick to as time goes by. Thus, if you would like to learn more about how to make an effective budget and adhere to it, you can use the link below to sign up for a personal budgeting course.
Having a Side Hustle
Setting up an extra source of income during your leisure time can help you in achieving your target savings and allow you to live with some ease during a recession. A few examples of what you could possibly pursue are signing up as a Grab driver, a food delivery rider or even working as a part time tutor. If these are too time intensive, starting up a blog or an e-commerce business could also provide you with an additional source of income to rely on. The possibilities are endless and it never hurts to have more money, nevertheless, it is important to note that these jobs require you to invest additional time and effort and will not be overnight successes.
Investing During the Recession
Not everyone will lose their jobs during a recession and some of you may be fortunate enough to find yourself with a surplus of cash. This could also be the best time for you to start investing as you will be able to purchase stocks, bonds, real estate and private businesses for a fraction of their usual prices. Making choice investments with sufficient research can bring about higher than usual returns in the future as the market recovers.
While these preparations and tips cannot guarantee that you will emerge unscathed from a recession, they help provide a buffer and also allow you to make the most out of the tough times.