Preparing for the Worst: 3 Things You Can Do Today to Protect Your Finances from a Possible Recession
A lot of Americans today are already prone to the financial ruin that a potential emergency situation might bring. Imagine how they’d fare when another recession hits the country’s economy.
While one can never really fully save their finances from losses caused by a recession, people can still benefit from taking some preventive measures they can employ in the present to lessen the blow.
Shift Your Attention on Factors You Can Control
No one person has control over where the economy is going, so it’s better to focus on things that one can actually control. This means taking an honest look at one’s current investments, savings, and even spending habits. But before all that, you should assess your income and its source first. How much job security do you currently have in your current employment?
To address the possibility of losing one’s primary source of income when a recession hits, Caroline Ceniza-Levine, a career expert, suggests that people ‘nurture their network’. What more, one should find ways on how they can be indispensable in their current job.
Another precaution one can start doing in preparation is padding up their savings. This can be done through the reevaluation of one’s spending habits and cutting down on unnecessary expenses to put aside. Unfortunately, this also means needing to put off purchases like a home or a new car.
Get Your Finances In Order
Aside from saving, one should also set aside some money for an emergency fund. Most financial experts deem having up to six months worth of expenses as a good rule of thumb when determining how much to keep in the fund.
However, one should keep in mind as well that unemployment time lasts longer during recessions. Considering this, experts at the business news publication CNBC suggest padding up the emergency fund to last up to 12 months. This way, you won’t need to sell your things for cash when most of your investments’ value has already gone down.
One may also want to consider accessing their savings to have some cash which would help one in going about recessions and volatile markets. These funds can then be temporarily put into money market and other high-yield bank accounts.
Protect Your Retirement Plan
Meanwhile, CNBC also says that financial advisors suggest people to think about converting their IRA or 401(k ) into a Roth IRA as the money in this type of account can grow tax-free.
In the end, though, one should still refrain from investing money in anything if that money would be needed during the next five years or so whatever the current economic conditions are.
More in financial advisor
Just Starting Off Your Military Career? You Don’t Want to Miss These Essential Tips
Being a soldier is one of the noblest professions out there. A career in the army, having the chance to protect your...September 2, 2020
Critical Money Advice From One of The World’s Most Successful Men
If you want a medical-related opinion, you go to a doctor, right? And not just any doctor, you try to find...September 2, 2020
Income Just Too Insufficient to Cut it? Here are Some Side-businesses Ideas to Complement Your Regular Income!
No matter where you live in the world, one thing is definite for all- the cost of living is growing tremendously...August 29, 2020
Reinvent Yourself for the Career of Your Dreams- The Only Guideline You Need in this Time of Crisis
When unexpected events disrupt our habitual routines or nudge you out of your comfort zone, you can’t help but question your...August 27, 2020
Millennials Have Traditionally Been The Key Financial Decision-Makers. But, Do They Still Matter?
Are millennials worth the hype given to them by the media? Isn’t that what keeps bothering industry moguls and experts across...August 25, 2020
Should You Consider Buying Residential Property During Coronavirus?
With the effects of Coronavirus mellowing down across the world, life has slowly started returning to normal. Though most people and...August 22, 2020
What Does the Perfect Recommendation Letter Demand? Letter Writing Tips from Expert Scientists
Recommendation letters are pretty important- there’s no denying that. When you’re an undergrad, you’d need one for your application to graduate...August 20, 2020
It’s Never Too Late to Make it on YouTube- Rick Beato and his Journey on the Platform
Ever since Jawed Karim posted the first YouTube video back in 2005, the popularity of the platform has just been skyrocketing, to...August 20, 2020
Have a Little too Much Time on Your Hands These Days? Why Not Try One of These Interesting Things!
When something like a pandemic hits the world, there’s obviously a lot of destruction, but there’s also a silver lining to...August 14, 2020