How do you prepare your finances for a recession and thrive in its aftermath? Since economic downturns are often predictable, investors can strategize financially ahead of time to survive them. Here are tips for coping and coming out of the tough economic times financially stronger.
A healthy emergency savings fund will come to your rescue when the economy isn’t doing well. Consider putting your money in a high-yield savings account and take advantage of the rising interest rates. Just be sure to save enough for a few months of upkeep or even a year, depending on your financial needs and expenses.
It’s a good idea to review spending and start setting your priorities right before economic times get tough. If you have to tighten your budget, planning early will allow you to make tough choices that aren’t emotion or panic-driven. This usually means determining what expenses to avoid or limit if your income declines during a recession.
Loans can provide a lifeline as you set up your finances for recession, but they’re more challenging to access in the middle of an economic downturn. As such, it’s best to borrow funds before credit standards get too tough for you to qualify for financing. Now might be an ideal time to approach your credit card provider for an increase in your balance. A home equity line of credit can also provide needed financing before the recession makes it tougher or impossible for you to borrow.
A healthy credit score will help you qualify for financing during tougher economic times. You can boost it by paying your bills on time and avoiding or minimizing outstanding debt, especially high-interest accounts. If necessary, prioritize debts that impact your credit score before items like medical bills that don’t show on credit reports.
With the S&P declining 20% since the start of 2022, it’s clear that the stock market has taken a hit. This is still one of the ideal times to buy stocks since stock markets have always come back up after a recession. If you increase your investment in stocks now, you’ll be rewarded generously when the economy recovers (and it certainly will).
Supplementary income can help you cope better during any economic downturn. Besides reducing your spending, you can also venture into part-time work or side hustles. If these options aren’t available, consider securing your job by doubling down on it and proving yourself invaluable when the going gets tough.
Economic downturns come and go, but markets always recover. Preparing your finances for a recession can mean increasing your investments, generating more income, and establishing a healthy cash buffer.
Are you looking for the right solutions to protect your personal property, such as your car or home, ahead of a recession? At C.V Mason Insurance Agency, we can provide personalized homeowners or auto insurance policies to suit your coverage needs and budget. Contact us today to discuss your specific coverage requirements.
