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5 Ways to Prepare for a Recession
No one can predict the future, but you can brace yourself for hard times
Recession. Kind of a scary word and one that has entered the conversation. Along with economists and financial gurus, you’re probably wondering what will happen. Are we headed toward another recession, à la 2008-style?
No one knows for sure. But soaring gas prices and high inflation have led to a gloomy consumer outlook. Rents and home prices continue to increase, while the Fed has raised interest rates. And a series of high-profile tech layoffs have made many people nervous about job security.
It feels like a storm is brewing.
I was a young professional in 2008. I worked for a company that sold software to banks… and the banking industry was hit hard. My company had to lay off a third of its workforce. Those of us that were left behind saw other cuts, just to stay in business. It was a tumultuous time.
While Treasury Secretary Janet Yellen says a recession “isn’t inevitable” it’s enough to make people nervous. 70% of economists believe that a will likely hit at some point in 2023 — which means you have some time to prepare.
Here are five ways to situate your finances and your career before a recession hits. And if it never comes, no harm done — you’ll have built up some financial health in the process.
1) Cut back on spending
Take a look at how you spend your money and figure out what you can cut. Everything is expensive right now anyway — prices on consumer goods have risen 8% since this time last year.
Consumer spending fell sharply in the early months of the pandemic. Some of this was due to layoffs, but many people stopped spending because stores and entertainment venues were closed. As a result, in 2020 people saved at nearly double the rate that they did in 2019.
Think of a potential recession as a time to hunker down again. By reducing your spending, you’ll have money to prepare for the recession in other ways.
2) Increase your cash on hand
As you spend less, you can save more. Start socking away money in an emergency fund, at…
