How to Prepare for and Survive the Next Recession
Be (financially) Prepared
The Boy Scouts teach it. Religions preach it. Today I’m going to add my voice to the chorus: Get your crap together!
It’s currently mid-day on a Friday and my work week is all but done. Time for me to start winding down and getting ready for a relaxing weekend. Only, Seattle is supposed to get hit by a mega-storm tonight and tomorrow, so I’ve got other things on my mind.
For the past few days my coworkers have been talking about working from home this week, making sure they have batteries on hand, 72 hour emergency preparedness kits at the ready, candles stocked up, gas in their cars and generators, a full pantry. All of this hurrying and worrying so that they can be prepared to deal with this looming storm and whatever fallout it brings.
One good thing about this storm is that it won’t catch anyone by surprise. We’ve been hearing about it for days, meaning we’ve had plenty of time to prepare.
HOW TO PREPARE FOR THE NEXT RECESSION
But what about the financial storms that are sure to hit all of us at some point in our lives? If you’ve not already experienced one, I think it’s safe to say that a financial storm is headed our way. The only problem is that we usually get blindsided by them.
One thing you can do to weather-the-storm is start preparing for it now. That way, whenever it does hit, you’ll be ready…financially speaking.
4 Ways To Prepare For Recession
Here’s a quick and dirty list of things we can all do today to prepare for and survive the upcoming recession:
1. Make Your Budget Great Again
Begin to scrutinize your budget and eliminate anything that’s unnecessary from it. My favorite way to spot holes in a budget is to organize my spending by categories using free money management apps like Mint. Identifying areas to cut back becomes obvious when you sort your spending by category like this.
Another way to recession proof your budget is to pretend that you’re unemployed. Going through your budget as if you were unemployed is an easy way to identify all of the fluff that you can eliminate. Once you’ve eliminated those expense from your budget, use the extra cash to pay down debts or build your up your emergency fund.
2. Eliminate or Reduce Debt
When you’re in debt, the money you make belongs to someone else. And when you’re going through tough times financially, the last thing you can afford to do is give your money away to someone else.
As quickly as you can, get to a place where the money you make is yours to keep. Then sit back and watch how fast your net worth grows!
3. Have an Emergency Fund
Everyone has a different idea of what an emergency fund is:
- $1,000 in cash?
- 3 to 6 months of living expenses saved up?
- Access to credit?
Whatever your strategy is, have an emergency fund in place for when the financial tough times hit…because they are going to hit. And falling on hard times hurts like hell of you don’t have a safety net.
4. Start a Side Hustle
You’ve heard the old adage, ‘don’t put all your eggs in one basket’. If your only income is from your full time job, then all of your eggs are in one basket. That’s dangerous. Start doing something right now that can become an additional income stream for you:
Me and my family are ready for our big weekend storm and that means I’ll sleep well tonight. But we’re also getting our financial affairs in order and recession proofing our financial plan, and that means I sleep well every other night as well.
Chime in!
Is your financial house is in order? Do you have an financial emergency plan ready to go?