9 Strategies That Will Make Your Finances Recession Proof
A recent survey reveals that many corporate executives at well-known American companies do not see a recession taking place in 2019. However, this does not mean that you should not take strong measures to protect your finances. If you fail to take heed to this sound advice, your finances may take a big hit during the next economic downturn.
Some economic insiders believe that the American economy is improving, but they do not hesitate to state that it could fall this year. This should cause alarm for everyone throughout the nation. This is the primary reason why experienced financial consultants urge Americans to get ready for the next economic cycle. This includes reducing your debt, protecting your money, and maximizing your investments.
Greg McBride, Chief Financial Analyst at Bankrate.Com, stated that this is the perfect time for you to put yourself in financial position to survive a potential economic storm.
With increasing debt levels and unpredictable markets, having solid money saving strategies at your disposal is the best way to survive a recession. It’s vital to point out that an economic recession is beyond your control, but you can control how you respond to it. Taking careful measures to protect your hard-earned money will make a huge difference with your financial future.
In this article, we will take a close look at nine strategies that can make your funds recession proof. Let’s get things underway.
1. Create a Realistic Budget
There’s an old saying in the financial world, “You should live within your means.” Creating a realistic budget is the best way to manage your finances. In short, a financial budget will help you see where your money is going.
How can you set-up a budget for your money? You can use computer software or a cellular phone application. Once you punch in the numbers, the computer software or app will handle the rest.
Many people have a false impression about financial budgets. They believe that budgets are only for people who don’t know how to manage their money. However, budgets can help you manage your finances wisely. You cannot afford to overlook this powerful financial tool.
2. Create an Emergency Fund
When the economy begins to dip, your employment status and income can be in jeopardy. This is why it’s vital for you to create an emergency fund.
What is an emergency fund? This is the money that you save up to help you live day-to-day during a financial hardship.
Here are some events that can take place during a recession:
- You could lose your job
- Your employer may cut your hours
- You make poor financial decisions
- Your business is unable to generate enough revenue to cover your living expenses
Your emergency fund will give you a safety net until you are able to get back on your feet.
How much should you save? You should save at least three to six months of your wages. This will help you resist turning to credit.
Resorting to credit will make matters worse. You will need more capital to repay your creditors. At the end of the day, turning to credit will be one of the worst financial decisions that you will make in your life.
Creating an emergency fund is a simple strategy that can help you prepare for an economic disaster. You will have some back-up funds and a peace of mind.
3. Focus on Prudent Spending
You should make an earnest effort to concentrate on spending your money wisely while the economy is in good shape. It is okay to treat yourself to nice things, but you should keep things in perspective. For instance, shopping sprees can put big dent in your finances. It is a huge mistake for anyone to live beyond their means.
Being disciplined with your spending habits will pay huge dividends in the future. You will increase your savings. When this happens, you will have a respectable checking account and a nice emergency fund. It’s also imperative to mention that you will have more capital to invest.
4. Network with Influential Professionals
Are you in the workforce? As we stated earlier, there’s a possibility that you will lose your job when the economy tanks. This is why you should network with influential professionals in your area.
Having a list of professional contacts will put you in position to get another job if your present employer lets you go. Make sure you keep your network active. Your contacts will be more than happy to share job leads with you.
Your network should include family members, close friends, and co-workers. You should consider joining business organizations, religious groups, and social clubs. This may sound strange, but volunteering can put you in place to meet people who can help you to find another job.
John Dunn once said, “No man is an island. No one is complete unto himself.” This old adage will help you stay on top of your employment game.
5. Update Your Resume
Please keep in mind that no job is immune to a recession. You should be ready to find new work if the economy takes a turn for the worst.
Let’s say that the economy collapses and your employer terminates your position. If your resume is updated, you can start sending it out immediately. You can customize it for the job you seek.
Make sure your resume highlights your achievements, skills, and job history. Be truthful and avoid rambling. You should also proofread your resume for potential errors. An error free resume will increase your chances of getting called for an interview.
6. Payoff High Interest Credit Cards
We enjoy having credit cards at our disposal. They are convenient, but misusing them will put you in a financial hole. Unfortunately, thousands of consumers run into financially difficulty when they max out their credit cards. Can you imagine how they feel when a recession takes place?
This is the ideal time for you to pay off your high interest credit cards. You should aim at maintaining zero balances throughout the entire year. In essence, your charges will get paid off within every billing cycle. This strategy will lower interest rates. It will also protect your finances from danger during a recession.
If the economy slides into a recession, you don’t want high credit card debt hanging over your head. This will put a tremendous strain on your budget. You will have less disposable income on hand.
Here’s another point we should mention. It doesn’t take a rocket scientist to know that late credit card payments will lower your credit score. You cannot afford to let this happen. This will reduce your chances of your creditor increasing your credit amount. You will also find it very difficult to get approved for new credit cards.
You can avoid these problems by simply using your credit cards wisely. If you have outstanding credit card debt, pay it off while the economy is healthy.
7. Diversify Your Investments
Once you have money in your possession, it’s time for you to put it to work. An experienced financial consultant will not hesitate to tell you that you should have a diversified investment portfolio. A diversified portfolio will stand the test of time during an economic recession. It will not take serious losses and it will recover within a reasonable amount of time.
What is a diversified portfolio? This is where you have a range of sound investments. This includes stocks, bond, and mutual funds. You should also consider adding index funds to your portfolio. Your invaluable assets should cover different sectors of the market. This will help offset any potential losses.
You should consult with a seasoned financial advisor or broker if you don’t have experience with investments. They will select investments that will compliment your short-term and long-term financial goals. They charge a modest fee for their services, but it’s worth paying.
8. Supplement Your Income
Supplementing your income is one of the best ways of staying in charge of your finances. Getting a second job or applying for freelance opportunities will increase your yearly income.
What type of skills do you have? It’s time for you to put these skills to work. Someone will be more than willing to hire you for part-time work. A part-time job can be a lifesaver during a recession.
Have you thought about freelancing? There are thousands of freelance opportunities around today. You can find them on sites like www.Guru.com, www.Freelancer.com, and many others. It will only take a few moments to apply.
It’s critical for you to keep in mind that freelance work is a one-shot opportunity. You do the work and get paid. There’s a slim chance of the outfit hiring you for a permanent position.
9. Real Estate Investing
Real estate investing is a sure-fire way of preparing you for an economic disaster. You can rehab homes and sell them for a healthy profit. You can earn a full-time income with this investing model.
Would you like to earn monthly passive income? You should buy a single-family home and become a landlord. Your tenant will pay rent to live in your property. As you can see, real estate investing is not a bad way to go.
Many corporate executives in American don’t see the economy taking a nose dive in 2019. However, you must be proactive. You must take measures that will protect your hard-earned money. If you apply the nine time-proven strategies listed above, there’s no reason why you will not be prepared for the next recession.
Please remember that your financial future lies within your hands. It’s time for you to take action today.