Recessions are nothing new. The question is never will a recession hit, but WHEN? and would you look at that, one may be right around the corner.
A recession is typically defined by a fall in the GDP in two successive quarters. Meaning, you won’t know for sure you’re in a recession until you’re two quarters into it.
When you think of a recession how do you feel? Scared? Worried? Excited?… wait what?
Yes, I just said excited. That is my feeling right now when I think of a recession coming.
The stock market may be way down, but I would bet my entire life savings that it’ll go back to its previous high, and rise much much higher.
It’s so easy to see a recession and panic. After all, it’s always talked about as a bad thing, no one wants stock or house prices to go down, do they? But if you don’t have to worry about making ends meet it can actually benefit you. Imagine that, the world is freaking out about losing money, and losing jobs. You may be worried for them, but you are excited about the new opportunities that are soon going to be available to you. Crashing stock prices to you become buying at a discount. If the new computer you’ve been wanting goes on sale would you sit back and say, “I don’t know, seems risky to buy it right now”? No! You’d be snatching it up. Think of a recession as a sale. If you’re secure in your position and have cash you can spare it’s a great time to be buying into the market when everyone else is running for safety.
The word recession strikes fear into the heart of many. But remember, recessions are normal, and if you’re prepared you can make the most of it and even come out ahead. Here’s what to do to prepare.
If you haven’t already done so, build up a good emergency fund.
And if you have an emergency fund, you may consider beefing it up a little extra. This looks different to everyone. Take into consideration your monthly expenses, how much you could cut from those expenses if you needed to, if you have multiple sources of income, the risk level of losing your income source(s) due to a recession. The typical recession lasts 2-18 months with the average at about 10 months. The key is to have enough saved to get you through the low employment periods when you may lose your job and have a hard time finding a new one. If you can make it through a recession without having to take actions that set you back then you are set up to resume growing when the economy recovers. When everyone else is trying to recover and get back to where they were, you’ll be riding the wave the whole way/
Be careful making risky job switches.
The last ones in are typically are the first to leave in layoff situations. That’s not to say you shouldn’t jump on good opportunities because of the potential of a recession where you may or may not even lose your job. But take it into account if you’re considering a career change.
The more secure your situation the more risk you can take. Such as if you have a well-funded emergency fund or multiple income streams.
Update your resume
No one likes to anticipate getting laid off, but in a recession, your odds are much higher. Having your resume ready to go could save you valuable time between paychecks. This also allows you to free up your time to focus on analyzing your situation and making ends meet.
Even though you can’t avoid a layoff, you can prepare for it.
Pay off debt
Paying off high-interest debt should be a priority no matter what the market looks like. But with a looming recession, the weight of that debt is much higher. When layoffs are on the line that extra 500 minimum payment on no income could easily sink you. And tackling those debts now can free up your income to take advantage of the big stock “SALE” going on.