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How to Prepare for and Survive the Next Recession

How To Prepare For 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.

The time to prepare for recession is now, not once bad times hit. Learn how to prepare for the pending recession today with these 4 tips. Be prepared financially so that when the next recession hits, you'll be able to survive the storm.

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?

By Ty Roberts

Ty Roberts is the founder of Camp FIRE Finance, and a husband and father of four living in the Seattle area. He's a fan of the 4% rule, 80s movies and music, dad jokes and cast iron cooking.

17 replies on “How to Prepare for and Survive the Next Recession”

I like this list a lot. When my financial house was out of whack I definitely could not sleep at night. It seemed to occupy my every thought. Now that it’s in order. I hardly ever think about it. It’s the best sleep medicine EVER!!!

I wonder if many of the sleep issues people have are rooted in money problems? I’ve thought of that before – but I guess I wonder if it’s more people than I ever would have though of…. We don’t have much of an emergency preparedness plan – but we probably should. We had an ice storm 20+ years ago, but things have been pretty quiet (although I probably totally jinxed us now…)

“Religions preach it!” I actually had a former pastor who preached a sermon he titled, “Get off your hump”! While it was about living life in general, this certainly reminded me of it. : ) Great post, simple yet very inspiring, thanks Ty!

Great tips Ty!
It’s true that you need to be prepared for financial storms. No matter how good things are going there’s always an emergency around the corner. I’m looking forward to getting more of an orderly budget in place over the next few months. Also, like Mustard Seed Money said, getting your financial affairs in order is like medicine. It definitely helps with sleeping.

Hey, Penny! It’s (often) frustrating to hear someone say “oh, just get out debt.” As if it’s an easy thing to do … I totally get that, but it’s still my main financial goal at the moment for the reasons I listed, but mainly because I want to keep the money I make!

It would be a lot easier to do if this blog somehow became one of those blogs that was making several thousands of dollars per month! 🙂
https://uploads.disquscdn.com/images/7e9e684b37e4a999ae4a03344c1bc5bf9383bc5b8d76bd76984a5ae6f0dda6cb.gif

I mean, with a GIF like that, how could you not be headed for thousands a month?! I wasn’t knocking your list, either. Just pointing out that it should be priority #1, but you have to work the whole list at once…or you’ll be stuck for a long time (if you have a stupid big mortgage like me).

Absolutely! I want to get to the point where I have 7 multiple streams of income. I know a successful artist that is going to have several licensing deals this year. I love all the quirky ways people make money these days. It’s just too scary in today’s flex world to just stick to one income.

wow, 7 income streams is great! And licensing your own art would be awesome. Unfortunately, I’m not very artistic in any way, so my income streams are currently limited to (1) my main job (2) dividend income (3) blog income (3) interest income and (4) income from selling unused stuff from my home. In the future, I hope to generate even more income through (5) business/side hustle, (6) real estate/rental income, (7) ….. not sure; I’m running out of ideas. Getting to 7 is tough! 🙂

Thanks for stopping by, Lila!

The area we need to work on the most is income (though we do have a mortgage too!). We have relied on one income for over a decade now and have been lucky that hasn’t bit us in the a$$. We’re working on it – it’s not easy, but hopefully within a year or so, we’ll have income trickling in from a couple of other sources. Great list, Ty!!!

Great list! As with anything personal finance related the mental and emotional aspects are just as important as the actual actions and numbers. An added bonus is that once you realize that financial preparedness is a lot less complex than people make it out to be you’re more likely to have the confidence to seek out solutions and problem solve on your own if and when you do have a financial emergency, and will be more likely to find a solution that’s more in line with your values instead of someone else’s.

Thanks, Matt! You nailed it – personal finance is easy. What’s hard is having the discipline to do what you know you should. And I love your comment about values. Moral flexibility, abandoning your values, is easy to justify in an emergency. Prepare now so you don’t find yourself making difficult comprimises later on.

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