Are You Financially Prepared for the Recession?
There is almost no question that the economy will go into a financial recession as we come out of the COVID-19 crisis. Japan is already reporting financial recession conditions, and the U.S. is sure to follow with the high unemployment numbers and many small businesses that are not going to recover from the shutdown.
So, what to do now?
Here are 9 steps you can take, depending on your situation, starting today to help you mitigate the financial challenges for you and your family.
1. Excel in Your Current Job
Most people skip this step, but if you are a top employee, you will be one of those retained by your business if they are future layoffs. If you are always late to work, miss a lot of workdays, or perceived as a poor performer, you will be the first to be laid off.
2. Start Networking
Far too few people are networkers or actively involved in networking. The number one source of good jobs is contacts you develop through networking. There are numerous groups from big cities to small towns that are either dedicated to networking, or it is a key component of what they do.
Ask people you know where they go and how well they feel it works. You could be getting a better job instead of just finding another one that replaces the old one if you are let go due to a recession.
3. Update Your Resume Now, Not Later
Most people wait until they have been laid off to update their resume, and it is a big mistake. Others will be ahead of you if you procrastinate and will get the jobs you want. Don’t delay! Not in a job where a resume is required.
If you work in some services businesses, a resume may not be required. But you should have your references ready to hand out (and be sure they know they are references and what they will say) and be just as ready to switch jobs if you find a better one.
4. Tighten Your Budget, Start with ‘Luxury’ or Larger Expenses
If you don’t have a budget now, then start one. It will help you identify expenses you can reduce or even eliminate. If possible, reduce any debts you have e.g., credit card balances, loans, etc. Smaller balances not only improve your credit, but they also allow you to pay less per month when you are in a pinch.
Next, stop spending money on things you can do without. That morning coffee you buy on the way to work can save you as much as $100 a month that you could use to pay off a credit card.
5. Create an Emergency Fund
Most Americans do not have an emergency fund, not even a small one. Take those savings you created from the previous step and start that emergency fund. Even $500 can be a big step in the right direction. Your goal should be to have at least 3 months’ expenses socked away should something unexpected happen.
We should all learn from the COVID situation. We can’t expect the government to help us during a recession; we are on our own.
6. Consider a Debt Consolidation Loan
There are already a bunch of aggressive credit card offers out there. Some have lower interest rates. You should consider consolidating your cards into one, if possible, at a lower rate. This will not only save you interest expense but also lower your monthly payment.
Another possibility is a debt consolidation loan where you pay off all your credit cards and get one loan. Be sure that the interest rate is lower than what you are paying now.
7. Get a Side Job or Other Income Source
There are always opportunities, even in a down economy. Many part-time jobs open up. You may want to try something new or just make some extra money. Either way, you can get a second job. It may even turn into a career change.
There are a surprising number of jobs that let you work very flexible schedules to fit your needs. Delivery services are in high demand, as they assist seniors with shopping, appointments, etc.
8. Learn about Managing Your Money
There are countless free services in almost every city in the country to help you meet financial challenges and educate yourself. On the internet, you can learn all the basic principles you need quickly if you do a simple search.
Information abounds, but you have to take advantage of it. Understanding money management is one of the most valuable, life-long skills you can possess.
9. Get Physically Fit, or At Least in Better Shape
Most people forget that mental health is closely tied to physical health. You don’t need to join a gym, just start taking walks. You will meet others and get more exercise than you might think.
Start small and work your way up. A walk for a mile or two for 3-4 days per week will make a big difference for most people. It is simple, free, and you go at your own pace. With so many people out of shape, it is a great first step (no pun intended)!
The key to any financial challenge is to take action and don’t delay. If you take some of the steps outlined above, you will be ahead of those who wait and give yourself the best chance to not only survive the recession but even thrive!