The recession of 2008-09 may have occurred nearly a decade ago, but it’s still a painful memory for many millennials. Unfortunately, economic downturns are a fact of life. The question isn’t if another recession will come, but when. But there are steps you can take now to prepare your situation to weather a storm and emerge even stronger. On this Worth It Episode, we will share 5 tips you can use to help you prepare for a recession.
It’s a great idea to start planning before the crisis hits. We recommend saving enough cash to cover 3-6 months of expenses. If you have children, saving for more than 6 months is a wise idea! It’s also a prudent idea to review any of your monthly bills that are automatically withdrawn. Take a full inventory of where your money is headed each month and cancel, modify or reduce any payment or service that is not necessary. Pay attention to your lifestyle spending habits. Do you drink a Starbucks latte every day? As much as we love them, smart spending means cutting back on things that aren’t necessary and reallocating that money to your savings buckets. Those lattes add up quickly! During a financial crisis, people tend to get more emotional, so having foolproof systems in place and being prepared is not only a good idea, it prevents the stress of having to manage your finances on a daily basis.
It’s a known that fact that many people lose their jobs during a financial crisis. One way to combat that fear is to work on becoming indispensable. This could mean learning a new skill, pursuing continuing education training, and probably even working harder than your coworkers. Dustin R. Granger, CFP® highly recommends becoming a “renaissance” man or woman, a person with a wide variety of interests and skills. Your work ethic, combined with an insatiable desire to learn is a great way to create job security!
Today, more than ever, there are ways to diversify your earnings by using your skills and technological know-how to create sources of income that extend beyond your day job. @Worthit_Podcast @DRGranger #worthitpodcast #SideHustle #DiversifyIncome Click To Tweet
Today, more than ever, there are ways to diversify your earnings by using your skills and technological know-how to create sources of income that extend beyond your day job.
Technology is making it easier than ever for people to start a side business. Creating multiple income streams isn’t easy, it requires plenty of hard work, but it is possible if you’re willing to put in the time and energy. For more insights on creating a side hustle, check out episode 16: 13 Reasons You Should Start A Blog. For some tips on how to grow your following online, check out episode 33: 11 Tips to Grow Your Instagram Account!
To start, don’t assume that you are immune from a recession. Many millennials were pretty young during the last major recession, so they assume it “will never happen to them.” That also means they are probably not preparing like they should be. A recession doesn’t have to be a bad thing. And every recession won’t be as severe as the last one. But business cycles are called cycles for a reason. There will continue to be ebbs and flows, upturns and downturns, expansions and contractions. This is the way the economic machine works. The trick is focusing your energy on those things you can control since no one has control over the business cycle.
Warren Buffet says “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful.” What does this mean in the context of recession planning? When other people are not investing because of fear, stock prices drop. That also means if you follow Warren’s advice, you could potentially buy up those stocks at a discount! That will also mean that as the market starts to go back up, you could potentially be ahead of the game. If you set your investing on automatic when things are booming, it makes sense to just leave it alone during a crisis. Like Dustin says…”money is like soap…the more you mess with it, the faster it disappears.” In a time of crisis, be weary of the opportunists who will try to capitalize on your fears (“don’t buy stocks, only buy gold” or “Banks will fail, don’t invest, just keep all your money in your mattress.”). This “wisdom” will not serve you well in the long run.
Warren Buffet says “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful.” What does this mean in the context of recession planning? Find out here: @Worthit_Podcast @DRGranger #worthitpodcast #Recession Click To Tweet
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
What if you had a clear formula to help you figure out how much to save… while paying down debt and enjoying life? It is possible… when you know your numbers.
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