Like the changing seasons, recessions are a natural part of the economic cycle. And just like you wouldn’t go outside in a blizzard without proper preparation, you shouldn’t face a recession without a game plan. Here are some actionable steps to prepare for a recession:
Take out a personal loan
Dealing with high-interest debt can be extra stressful when the economy is struggling. In the event of a recession, one of your top priorities should be repaying your debt to get your finances back on track.
One way to do this is to take out a personal loan to consolidate your high-interest debt. When you consolidate your debts, you can focus on paying off one loan instead of several. This strategy can help you get out of debt faster by saving on interest payments.
Bulk up your emergency savings
Financial experts recommend setting aside three to six months’ worth of living expenses for your emergency fund. It may seem like a lot, but remember, this is the safety net that can protect you if a recession happens. Start saving money now so you’re ready for whatever comes next.
Make a budget and see where you can cut back on unnecessary expenses. Then, set aside a fixed amount of money each month into a savings account. Once your emergency fund reaches a certain level, you can start investing the money instead of just letting it sit.
Building up your emergency fund doesn’t have to be daunting. Start small and make it a goal to add more each month.
To grow your money faster, save the change on every purchase with features like Round Ups1 when you open a High Yield Chime Savings Account. Before you know it, you’ll have a nice nest egg to help until the recession’s over.
Monetize your skills with side hustles
If you’re worried about how you’ll make ends meet during the recession, it’s time to start exploring some side hustles to grow your income. From freelancing to selling handmade goods, there are plenty of ways to earn extra cash.
One easy way to start raking in money is by freelancing. There are dozens of websites where you can find freelance work – such as Upwork or Fiverr – so take some time to explore your options. You can offer your services as a writer, editor, graphic designer, or web developer.
You could also consider selling your awesome creations online if you’re a whiz with a glue gun or have a knack for crafting. Etsy is a popular marketplace for handmade goods, and it’s easy to sign up. Just create a shop and start listing your products.
If you’re always on the hunt for good deals, you could become a reseller of second-hand goods. eBay is the perfect platform for this. With a little effort, you could soon be earning a decent profit.
And last but not least, if you have a few hours to spare each week, you could always take on a part-time job. From dog walking to language tutoring, there are plenty of low-effort ways to stack up your paper.
Don’t wait until the recession hits before looking for ways to make extra money. Get started now so you won’t have to panic when the time comes.
Upskill and future-proof your career
With a recession in the air, it’s natural to feel anxious about your job prospects. But there’s no need to panic! You can do plenty of things to future-proof your career and ensure you’re well-positioned to survive an economic downturn.
One of the best things you can do is upskill – invest in yourself and your career by learning new skills that will make you more employable. Take a close look at your skillset and identify any gaps. Then, consider how you can fill those gaps by taking on new assignments at work or taking courses outside of work.
Not only will this give you a competitive edge in job hunting, but it’ll also make you more valuable to your current employer.
Diversify your investments
As the old saying goes, don’t put all your eggs in one basket. This sage advice still holds when it comes to preparing for a recession. By diversifying your investments, you can minimize the impact of a downturn in the economy. Here are a few ideas for how to do that:
- Consider investing in both stocks and bonds. If the stock market takes a hit, you’ll still have some money invested in less volatile bonds.
- Don’t just invest in domestic companies. Supporting your local economy is admirable! But if you want to shelter yourself from the economic turmoil at home, it might be better to expand your portfolio to include foreign securities.
- Eliminate company-specific risks with funds. Investing in a mutual fund allows you to spread your risk over a wide range of companies and industries. Mutual funds can help protect you if one particular sector or company takes a hit during a recession.
There’s no guaranteed way to protect your investments against a recession. But by diversifying your assets, you can navigate the recession with more confidence and peace of mind.
