How to get through an economic recession
No matter what happens in life, change is the one thing that you can always expect. One day you might be on top of the world, while the next you are struggling to make it through the day.
The same thing can be said about any country’s economy; there will be periods where economic stability and progress is evident, and there will be periods of recessions where people will struggle to earn money and get jobs.
Not many people get through an economic recession unhurt, so the best thing you can do before the next economic repression happens is to prepare so that there is less damage to your finances. Here are some steps you can take to prepare yourself for the next great recession.
Maintain an emergency fund
Most people are not prepared for the next recession because they are too busy being comfortable and relaxing while the economy is great. They are happy with their job, their pay, and all the unnecessary things they buy from malls and supermarkets. You can be sure that economic progress will also lead some people to spend in excess.
While it is okay to reap the fruits of your hard labour, you should still get ready for the next recession which will eventually come. Recessions bring a lot of uncertainty with them because you will face the same problems you do today, except you will have a lot less money to deal with these problems.
One of the best ways to prepare for this uncertainty is to start an emergency fund.
What you can do: Everyone should have an emergency fund whether or not you are expecting an economic recession. Having money for hard times is one of the most basic rules of being a responsible adult.
This emergency fund especially becomes handy when you lose your job, go to the hospital, or run out of money to pay rent during extremely hard times. Having some money in the bank will determine whether or not you will spend the next month begging for money while looking for a new job. Save some of your income every month so that you are prepared for tough times.
Find new sources of income
One thing you can surely (and unfortunately) expect during a recession is that many dedicated and loyal employees will lose their job. They will lose their job and have to try hard to find new work to take care of themselves and their families.
Now, if this were some other time, losing a job would not be the worst problem you can have; but this is during a recession. You are not the only person who lost a job or are looking for one. The company you work for is probably not the only company cutting jobs to erase some expenses and save money. You cannot just sit around when you lose your job; you need to find new ways to make money.
What you can do: Finding new ways to make money is something many people are forced to do during recessions. You cannot just sit on the couch all day during a recession because you will go hungry and get kicked out of your place if you do.
Be active and find other ways to make a living. Some people freelance, rent out a room and do odd part-time jobs just to pay the rent during a recession. Other people even try odd jobs that they have no experience in out of utter desperation and end up enjoying more than their previous work.
Whatever the case, always remember that you need money now more than ever and that you should be willing to go the extra mile to get it.
Cut down your expenses
While looking for new ways to make money is a step in the right direction, it might not always be enough to get you through economic hardships. You can work one, two, or three jobs and still not be able to live the life you did before the recession hit.
Unfortunately, you will definitely need to sacrifice some things during a recession. One of the most basic, yet hardest steps you can take to counter the sudden loss of income is to cut down on your expenses. Your utility bills and unnecessary expenses all suck the money right out of your pocket.
What you can do: Take a look at all of the bills in your mailbox and ask yourself which of these things you pay for are actually necessary. Stop spending on unnecessary things like Netflix and weekly dinners because there are more important things you should be thinking about and spending for.
Discipline yourself and focus on spending only on things you need and can afford. There will be a lot more time to do those things once the economy gets better and the recession ends.
Make sure your investments are safe
We all know how the stock market is glorified in television and the movies, but what you see on the TV is far different from what actually happens. Stocks can be a very risky investment and can easily send you down a deep hole when the next great recession hits.
People have actually taken their own lives because of sudden and huge losses in the stock market. Avoid making risky investments when hints of a recession are on the economic horizon.
What you can do: While stocks are a very risky investment that can have high returns, there are other options available that are much safer. Try to invest your money in less risky options such as mutual funds; mutual funds can also give you returns while keeping you on the safe side of the investment fence.
Bonds are also a good option even though they give you fewer returns because they perform steadily and carry a much lower risk. Diversify your investments so that they don’t all crash at the same time when the recession hits.
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