A recession appears to be imminent, according to the financial media. Economists are pessimistic that the current extraordinary economic boom will end, and the prospect of an impending recession is unnerving
A recession appears to be imminent, according to the financial media. Economists are pessimistic that the current extraordinary economic boom will end, and the prospect of an impending recession is unnerving.
Those who have these views have both positive and unpleasant things to say. As a result, even the most astute economic forecasters cannot foresee what will happen to our economy in the future. However, we know that some financial fads have a fixed lifespan. We all felt that housing prices could only go higher in 2007, right? Things can't continue increasing forever, as we found the hard way in 2008.
You have no idea when a recession will or won't strike, so how can you prepare for it? The good news is that you can take various precautions right now to keep your personal and financial information safe.
According to financial experts, everybody should have an emergency fund that can cover three to six months of spending. An emergency fund can help you get by while searching for a new career.
However, if you lose your work during a recession, the consequences could be far more grave. Finding a new job might be much more difficult when the economy suffers. During the recession, the median length of unemployment was more than 25 weeks (almost six months), but the present median of unemployment is less than 9 weeks.
Make sure you have enough Money in your savings account to cover unexpected expenses. Create an emergency savings fund by setting up automatic transfers from your checking account to your savings account.
There's no reason to fear if you don't have an emergency fund large enough to withstand a long period of unemployment. Retirement planning, remember that you'll have something to fall back on if you get the dreaded pink slip.
Another proactive action to take is to identify how your spending habits would change if you lost your work or had to accept a wage cut. Review your current budget and determine the items you may trim to ensure that your emergency fund can withstand a reduction in income.
You may even set a tiny goal for yourself and see if you miss the Money you used to spend. As a result, you'll have more Money in your emergency fund and a better sense of control over your expenditures.
Paying off your credit card debt is excellent if you're currently carrying a balance. If you lose your job or get a pay cut, adding to your debt could be life-threatening. The last thing you'd want is to find yourself unable to pay your credit card payments and to deal with debt collectors while you're already in financial distress.
Even if you have health insurance, the expense of medical care can be excessively high. In a Bank of America Workplace Benefits Report, 53% of Americans have delayed a medical appointment, test, or operation or purchased medication to save Money, according to the report.
This is why you should make an appointment with your physician as soon as possible. Even if you have health insurance, medical expenses can add up, but the cost increases exponentially if you don't. Save money on your bills, if your work provides health insurance, getting a checkup now may prevent future health issues (and financial hardships).
Watching your retirement savings take a nosedive during a recession can be challenging. It's easy to succumb to the temptation to follow the voice in your head that tells you to withdraw your Money from the stock market or risk losing it all. If you decide to liquidate your investment accounts, you will permanently wipe out temporary on-paper losses.
In a recession, you should only check your portfolio once every three months, if not fewer. The best way to deal with this problem is to bury your head in the sand.
If you're close to retirement, you should consider not making any changes to your portfolio. Investing your retirement funds for the long term and retiring during a downturn can be a recipe for disaster. In that case, you may be able to retire but unable to use your retirement savings because of the recession.
If you plan to live off your investments within the next several years, you might consider converting part of your investments into cash equivalents. These will stay steady and available to you in the event of a recession.
Even if we can't predict the future, we can all do better financially by taking a few basic steps now. In either case, you'll be glad you took these precautions to safeguard your Money, regardless of the current state of the economy.
Can’t donate? Please share. Even a quick share on Facebook can help.
The average share raises $97.