Worried about the recession? Here are some ways to take control of your financial security.
As far back as last year, the doomsayers have predicted that the United States, and much of the global economy, are headed for a recession in 2023. And while the economy has put up a fight so far, there is still a lot of fear that the proverbial rug could be pulled right from under everyone.
The fear is understandable. With all the negative headlines popping up here and there, you wouldn’t be wrong to fear the worst about a potential looming economic downturn.
Ultimately, whether there’s a recession or not is out of your hands, but that doesn’t mean you are completely helpless. There are still steps you can take to improve your personal financial security.
In today’s newsletter, we’ll share our ‘economy apocalypse’ (we’re kidding) kit. In it you’ll learn how to:
🫂Join the Opportunist’s Club
🪙Save for rainy (and hot) days
✂️Cut your coat, and settle your affairs
🤑It’s okay to be an Opportunist
An opportunist is someone that finds and takes advantage of opportunities, no matter what. A lot of people DO NOT like opportunists. And that’s understandable. There’s something “icky” about them, and how they seem to hunger for everything.
But, when it comes to being a successful investor, and one that seeks to ensure that come rain, come shine (and recession), they are going to be more than okay.
Here’s the formula: if you’re young, say 10-30 years away from the average retirement age (50), this may just be your time to take as many risks as you can with investments. You have the unique ability to ride out any market volatility– seeing as how the average market return often does bounce back. It could mean a truckload of meaningful progress for your portfolio.
Where there’s fear or uncertainty, the bigger picture always has opportunity lurking around somewhere. You could take this period of impending economic downturn as a chance to buy securities that are lowly priced and experience some pretty sweet returns down the line.
As the legendary Warren Buffet puts it:
“Be fearful when others are greedy and greedy when others are fearful.”
For older investors closer to retirement, the script reads a little differently. At this point, it’s the right time to seek a financial planner (that you trust) to keep everything in order.
✂️The Good Old Cut-Down/Pay-Off Strategy
Excessive spending and debts. The twin warriors of the sinkhole that is financial insecurity.
And if you’re worried about a recession, they’re the last things you want to have on your plate at any point in time. The easy solution? Reduce your spending and pay down your debts.
Taking a look at all your recent transactions to identify what costs to cut, and what you need to eliminate. This is a great step toward putting yourself on better financial footing. Next up is your debt status. Any extra funds that have been freed up from reduced spending can and should be used to pay down any debt balances you have. Bit by bit, of course.
This way, you’re in a much better off position, whether there’s a recession or not.
⏫Crank up your savings
Here’s a little math equation everyone should know: +ES = Le.
where: ES stands for emergency savings, and Le stands for increased liquidity.
Okay, we made that one up, but it’s got every bit of truth in it. When you increase your emergency savings, you get to increase your liquidity.
Emergency savings and increased liquidity are super helpful in the event that you lose your job or something pops up out of nowhere, as it usually does during economic downtimes. We’ve already seen a number of mass layoffs, especially in tech, so we should expect more if things get worse.
We generally recommend saving up to cover at least 3 to 6 months of expenses to give you a good-enough safety net.
Speaking about layoffs, the good thing is that job numbers haven’t been that bad lately, and some of the laid-off population were able to get jobs in under three months– and with even better jobs.
NB: If you’ve lost your job recently, and are looking to secure one with the salary you deserve, check out our article on proven salary negotiation tips.
🔑Unlocking Financial Security 🔓
In times like these, the best thing you could do to get a soft landing is to conserve your resources and focus only on the essentials. There’s never been a better time for budgets and reduced monthly bills. The best part is, even if there isn’t a recession, these steps will leave you with air to breathe financially, and then some more.
