Money for Any Reason You May Need!

5 Things to Do Today to Prepare for a Future Recession

Recessions are a natural part of the economic cycle. If history repeats itself, we experience one in the United States once every five or six years. Given this knowledge, it is important for everyone to prepare for that impending recession. Whether or not it happens is not the issue, consider it one of those ق€œbetter safe than sorryق€ scenarios. Wouldnق€™t you rather be prepared? Here are five ways to get started today.

1. آ Donق€™t Have All Your Eggs in One Basket

The easiest way to prepare is to avoid having all of your income in one area. If you are a single income household this is even more important. What happens if your job is eliminated during the recession? That leaves you with nothing. Instead, have a backup plan or a sort of insurance for your income. You should have several types of income coming in, whether they are from one person, such as someone with a second job or side business or two people in the house get a job. Whatever the case may be, you know that you are not relying on a single income that could be gone in the blink of an eye.

2. آ Save and Eliminate Debt

These two steps go hand-in-hand. If you eliminate debt, you will be able to save more in the long run and that is the key to avoiding a downfall during a recession. The less debt you have, the more money you can put aside in an emergency fund. This will help you pay your bills should you lose your job or even have your hours cut during a recession. If you do not have very much debt, start saving right away; if you have debt, start getting it paid off so that you can save in the future.

3. آ Diversify Investments

If you are the investing type, make sure you are as diversified as possible. During a recession, you donق€™t know what is going to get hit the hardest, so have your money in several different places so that your investments do not all take a huge hit at once. If a recession does hit and you lose your entire stock investments, for example, you can rely on the money you had in a money market or another investment to help you get through the hard times.

4. آ Stop Spending Excessively

It can be easy to adjust to a luxurious lifestyle when the economy picks up, but adjusting the other way can seem near impossible. Rather than living outside of your means now, start paring down. Live as if we are in a recession so that if one does hit, you will not have to make many adjustments. This does not mean that you cannot splurge every now and then, but making a habit out of it will only force you to have to dramatically change in the future.

5. آ Donق€™t Get Insurance Poor

As a society, we are all brainwashed to think we need numerous amounts of insurance in order to get by and to save us in case of an emergency. The problem is that paying for the insurance premiums is making many people insurance poor. The money you have been paying to the premiums could have covered your savings, helping you to overcome the recession. If you are paying multiple insurance premiums right now, really consider which ones are a necessity and pare down on the ones that are not so you can start socking that money away for a rainy day.

Preparing for a recession might seem morbid or as if you are a pessimist, but it is an important part of staying afloat. When and if the economy does take that negative downturn that everyone assumes will occur sooner rather than later, you will be fully prepared for whatever comes you