Recession-Proof Your Finances: Tips for Financially Preparing Yourself
The possibility of an economic recession can feel overwhelming, but there are steps you can take to prepare yourself financially and weather the storm. Here are some tips for how to financially prepare yourself in the face of a recession.
Get a Home Warranty
Investing in a home warranty can be beneficial during a recession. It is a service contract that covers the repair or replacement of major home appliances and systems. By paying a monthly or yearly fee, unexpected repairs can be avoided, saving homeowners thousands of dollars. Click here for more info on how a home warranty can be a worthy investment.
Stick to a Budget
Creating a budget is an essential aspect of preparing for a recession. To do so, start by listing your monthly expenses, including rent/mortgage, utilities, groceries, and transportation costs. Then, compare your expenses to your income, and identify areas where you can reduce spending.
Get an Online Degree
To ensure job security during a recession, consider this option: earning an online degree in a high-demand field. This will provide you with the required skills and credentials to pursue a higher-paying career. When exploring fields, opt for business and finance, which have the potential to thrive even in a recession. There are various online degree programs available, granting you the flexibility to earn a degree while working.
Cut Back on Your Expenses
During a recession, it's important to reduce your spending and cut costs wherever possible. This means being mindful of your purchases and avoiding unnecessary expenses. Consider buying generic brands instead of name brands, cooking at home instead of eating out, and using public transportation or carpooling instead of driving alone.
Make Your Home Smarter
Smart home products can help you save money during a recession. For example, a smart thermostat can automatically adjust your home's temperature to save energy and lower your utility bill. Smart light bulbs can turn off when you leave a room, saving electricity. When purchasing smart home products, consult online resources from experts and users before you buy to ensure you're getting the best deal and the most efficient products.
Make Smart Investments
Investing wisely is crucial during a recession. You may be tempted to sell all your investments and move your money to a haven like cash or gold, but this may not be the best approach. Instead, focus on diversifying your investments across different sectors and asset classes. This can help protect your portfolio from market fluctuations.
Widen Your Streams of Income
During a recession, it's important to have multiple income sources. This can help you weather financial storms and avoid job loss. Consider starting a side hustle or freelance work to supplement your income. Look for ways to turn your hobbies or skills into a money-maker.
Consult a Financial Advisor
Working with a financial advisor can help you navigate a recession and make smart financial decisions. A financial advisor can help you create a budget, invest wisely, and plan for the future. Dan Rhoads helps you stay disciplined during a recession and avoid making impulsive financial decisions.
Start an Emergency Fund
Finally, it's important to build an emergency fund during a recession. This should be a savings account that you use only in case of emergencies, such as job loss or unexpected expenses. Aim to save at least six months' worth of living expenses in your emergency fund.
Preparing financially for a recession necessitates discipline, planning, and wise decision-making. By following the tips provided above, you can position yourself to survive and flourish during an economic downturn. Remember, it's never too late to start building your financial stability.
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References
“Why the US Can Avoid a Recession in 2023,”Goldman Sachs. Published 5 Jan 2023. https://www.goldmansachs.com/intelligence/pages/why-the-us-can-avoid-recession-in-2023.html
Home Warranty Plans, American Home Shield.Accessed online 23 May 2023. https://www.ahs.com/
“Budget Breakdown for Monthly Costs,” CreditCounseling Society. Accessed online 23 May 2023. https://nomoredebts.org/budgeting/budgeting-guidelines
Online Bachelor’s Business Degrees, Universityof Phoenix College of Business & Information Technology. Accessed online 23May 2023. https://www.phoenix.edu/online-business-degrees/bachelors.html
“How to Get Your Personal Finances Back onTrack,” Dan Rhoads Health & Wealth. Published 2 March 2022. https://www.rhoads.agency/post/how-to-get-your-personal-finances-back-on-track
Smart Home Scoop. Accessed online 23 May 2023.https://smarthomescoop.com/
“Diversify Your Investments,” Investor.gov, USSecurities & Exchange Commission. Accessed online 23 May 2023. https://www.investor.gov/introduction-investing/investing-basics/save-and-invest/diversify-your-investments
“7 Steps For How To Start A Side Hustle,” byBola Sokunbi, Clever Girl Finances. Updated 7 May 2023. https://www.clevergirlfinance.com/starting-a-side-hustle/
Wealth page, Dan Rhoads Health & Wealth.Accessed online 23 May 2023. https://www.rhoads.agency/wealth
“6 Steps to Creating an Emergency Fund,”Morgan Stanley. Updated 15 Dec 2022. https://www.morganstanley.com/articles/how-to-build-an-emergency-fund
