7 Steps to Take Right Now to Prepare for a Recession
Find out if you’re getting ripped off on your car insurance in less than two minutes.
No long forms · No spam · No fees
Recent months have put financial strain on many people for a variety of reasons. Some have watched their savings roller coaster up and down along with the stock market. Others have lost their jobs due to the coronavirus. And some have unexpected new costs they must cover — like paying for childcare while schools are remote and daycares close down.
It’s hard to say what the financial future looks like. But here are some key steps you can take to protect yourself in uncertain times.
1: Find Ways to Save on Essentials
There are certain things that you absolutely need — like groceries and electricity. But there may be ways to cut down on these costs. Switch to generic brands that might cost less, and take a look at your regular bills to find opportunities to save.
Take insurance, for example. If you use a smart app that acts as your personal insurance shopper, you could save $900 a year without losing coverage or protection.
2: Stay Connected
Job loss is a major source of depression, and social isolation is one of depression’s most insidious side-effects. Even when the job loss isn’t related to performance, the pain it causes can cause tremendous psychological trauma.
Reaching out is hard when you don’t feel valued, but that’s when you most need to. Staying connected requires more than checking in on LinkedIn (which is a good first step), but don’t rule out volunteering. You never know how acts of kindness can improve your self-esteem (generosity is good for the brain) and enlarge your circle. Most cities and counties need help right now. Get involved. It could pay off in many ways, large and small.
3: Look for Alternative Forms of Income
Working for peanuts is all very fine, because during a recession peanuts can become hard to come by. That’s why you need to start moonlighting now, and our gig economy offers countless chances to pick up extra work.
Navigating the side hustle has never been easier, thanks to sites like Flexjobs or SolidGigs. It might seem daunting to get started on these platforms, but if you spend time curating your profile, you’ll give yourself a decent shot. Many of them involve working from home, which could be just what you’re looking for.
4: Hold off on Big Purchases When Times Are Uncertain
When you’re on rocky ground financially, it might not be the right time to splurge on a new, well, anything. Major but unnecessary purchases will have to wait until things stabilize. It might not be the right time to buy a new 60-inch Apple TV, but buying a house might be the right move for some, because it can be a buyer’s market.
This is also not the time to take on additional debt if you can avoid it. Stay on top of credit card and bill payments. The bottom line: no one is certain of anything when it comes to the current economy.
5: Build Up an Emergency Fund
This is the time to replenish (or begin) an emergency money fund, to build up a nest egg and also think about the long-term. Diversifying your 401(k) seems to be in order as well — you don’t want to be staring at an empty account in your old age. There’s nothing like a recession to refocus the mind on what matters and what doesn’t.
6: Think Through Job Options
Low unemployment can lull you into a false sense of security, thinking that your skill set is fine. Whereas the reality is that workers have to continue to re-invent themselves. This could be a good time to finish your education or pursue a certification.
Being a superstar at work might save your job (for now), but what about in two years? The recession hasn’t changed the fact that workers needed to be nimble to stay employed.
7: Be On The Lookout for New Opportunities
Even during great turmoil in the job market, new opportunities emerge from the least likely places. Amazon recently announced it was hiring 100,000 new workers. So have other companies. Stay attuned to these kinds of developments. If the Great Depression was any indication, federal and state governments will hire possibly millions of workers. And certain lines of work, like health care, might stay more stable than others.