Being in a recession can be quite scary for some people especially if they aren’t prepared.
As with most things, if you’re prepared for something, then you’re more likely to push through it easier.
We know that preparing for a recession is the best way to avoid its negative effects and also ensure that we are safe, secure, and economically stable during this time.
If you’re someone who’s looking to prepare for a possible recession and who wants to make the best out of a difficult situation, then you’re in for a treat.
We’re going to show you the ropes on how to prepare for a recession to make this time as easy as possible.
What Exactly Is A Recession?
A recession is a decline in economic activity that can cause trade, employment, income, and more to decline.
Although it’s a difficult time, it’s usually a short-lived time and won’t last forever.
Recessions can affect people’s daily lives, income, and employment a lot. Let’s look at a few aspects of our lives that might be affected by a recession:
- Employees are being laid off, fired, or employment hiring is at a standstill
- Prices of items are stagnant, but trade is limited
- Wages decrease, bonuses are eliminated, and overall income is much less
These are a few of the short-term things that can happen during the recession, but this isn’t even touching any of the long-term effects of the recession.
A recession can be a difficult time for people and businesses, which is why being prepared is essential.
How Do I Prepare For A Recession?
As we said, there are many different ways that a recession can affect us, so knowing how to prepare for one can help you eliminate as many of those effects as possible.
Most of the preparations that we’re going to talk about are primarily focused on finances, budgeting, and career options as these are the most affected by the recession.
Here’s a list of some things to consider when preparing for a recession:
- Budget
- Career
- Savings plan
- Debt
- Income options and possibilities
If you’re looking to prepare for a recession then it’s best to take a look at these aspects of your life and make adjustments.
Before we begin, feel free to take a look at this video from CNBC giving a rundown on recession-proofing your finances.
Reassess Your Budget
The first thing that we always tell people is to reassess their budget.
Your budget will change dramatically during a recession because you should expect to make a bit less income than you have been.
Prices also might be different for goods and services, so preparing for fluctuation is also essential when determining your budget.
Be sure to set a budget that makes sense with your income, bills, and other necessities.
Be sure to focus solely on bills, food, and necessities when determining a budget that works for you and your family.
Now is the time to cut out as many unnecessary purchases as possible and prepare for a smaller monthly budget.
It may be difficult, but it’s definitely essential for preparing for a recession.
Focus On Debt
When it comes to debt, it’s best to not take on any new debt and only focus on paying off prior debt.
High-interest should be the first type of debt that you focus on paying off.
This can help you keep your monthly debt or credit bill much lower, plus, it can help you eliminate the burden of carrying so much debt during a recession.
Getting your bills, including debt and credit bills, as low as possible will help sustain your budget and also ensure you have more money to pay off essentials or save during this difficult time.
Consider Your Career
Having a sustainable career is one way to prepare for a recession. Some people with certain careers are more at risk of losing their job than others.
More essential work such as doctors, government employment, trades, and more can be sustained much longer throughout a recession.
This is not always necessary, but if you’re worried about losing your job during this time, then you will be prepared.
This would be a great time to redo your resume and consider other options, especially in the event of getting a pay cut, being let go, or being laid off from your job.
This is a huge fear for a lot of people, so preparing for the worst is always in your best interest.
Get A Side Gig
One way to have some extra cushion when it comes to a recession is to get a side gig.
A side gig can help give you a little extra income and something to fall back on in the event that you lose your job or receive a pay cut.
Some side gigs to consider during a recession are:
- Babysitting or pet sitting
- Freelancing
- Bookkeeping
- Renting out a space
These options are some of the few that you can take on as a side job or even as a full-time job during the recession.
These are gigs that are mostly self-employed, so you won’t have the fear of losing income or losing the job itself.
Doing things like selling your talents or services is also a great way to make extra income and it could last you throughout the recession and become your full-time career.
Avoid Large Purchases
During a recession, most people are fighting for the little bit of income that they are getting.
Many don’t have the income or time to make a big purchase, but we want to stress that a recession is not the right time to do it.
Keeping all your income saved up as much as possible is the best way to make it out of a recession on top.
Buying things like homes, cars, taking out large loans, or even cosigning for one of these things can make your experience during the recession much worse.
Where Should I Put My Money During A Recession?
Knowing where to put your money during a recession can also help you prepare for it.
When it comes to being in a recession it’s most definitely important to pay attention to your spending habits and make some adjustments.
Here’s a simple list of things to put your money into when going through a recession:
- Emergency fund or savings account
- Pay off high-interest debt
- Buy goods in bulk
- Keep up with investments that are worth your time
Putting your money in these places will help you survive the recession while also keeping your funds as stable as possible, which is exactly what we want during a recession.
The Bottom Line
We know that preparing for a recession is the best way to avoid being swallowed up by all the negative effects of this economic hardship.
Keeping a side gig, paying off debt, limiting large purchases, and sticking to a smaller budget can help you survive a recession stress-free.