While the American economy is healthy right now, it won’t always be that way. Sooner or later, we’re going to experience another recession. The next economic downturn might not be as bad as the Great Recession, but if the economy contracts, it’ll almost certainly affect you or your business. Therefore, before the next economic downturn hits unexpectedly, you should start getting ready. Here are four ways you can strengthen your finances before another recession.
1. Get Your Finances in Order
A recession is a bad time to determine whether you’re living within your means, and whether you’re saving and investing enough for the future. Instead, while the economy is strong and your job is secure, you should ensure that your finances are in good order. Analyze your income, spending, and financial goals; then, set a household budget. A detailed financial plan will help you deal with your day-to-day financial requirements and will assist you as you prepare for the future. More importantly, having a very clear idea of your financial situation will make it much easier to adjust your savings and spending when a recession does finally hit, so you’re more agile and adaptive.
2. Prepare for Emergencies
If there’s a recession, one of the biggest and most immediate threats facing individuals is loss of income. If you own a business, a recession could drastically decrease the amount of goods and services your customers are willing to buy. If you work for a company, your employer may be forced to lay you off as the economy contracts. Therefore, if you want to mitigate the risk of reduced income during a recession, you should start building your emergency fund right now.
An emergency fund could help insulate you from the immediate threat that income reduction or loss during a recession could cause you. If you have the funds on hand to pay your bills for several weeks, you’ll have the flexibility to look for additional employment, or otherwise make decisions to improve your position as the recession begins to take hold. However, even now, less than half of all Americans have $1,000 on hand to deal with an unexpected expense. If you’re one of them, start building your emergency fund before another recession strikes.
3. Learn New Tricks
An emergency fund won’t last forever, so you’ll have to find another source of income sooner or later if you’re laid off in an economic downturn. However, if the recession hits your particular work field hard, it may be extremely difficult to find a new job with another employer. One way you can strengthen your financial position before the next recession is by increasing your employability so you have the ability to work in different fields. This will enable you to cast your job search net wider in the midst of a recession.
While the economy is good and you have good job security, consider taking night school classes or vocational training courses. These can help you improve your current work skills or even develop new ones altogether. Additionally, you may want to consider developing a part-time job, or side hustle, right now. Working part-time for a driving service such as Lyft or Uber or building up your reputation on freelancing websites such as Upwork can give you a durable and steady source of income when a recession takes hold.
4. Tackle Your Debt
When you’re carrying a great deal of debt during a recession, it’ll only make things worse for you. If you lose your job or have reduced income due to a downturn in the economy, those high monthly credit card payments will only add to the challenges you’re facing. Additionally, it can be extremely difficult when a recession hits to get access to the type of resources you need to get out of debt, such as a debt consolidation loan. After all, if you lose your job or your income decreases, banks are likely to see you as a higher risk. Therefore, since the economy is good, you should work to tackle your debts right now.
Fortunately, the team at National Debt Relief can help you strengthen your finances before the next recession by assisting you with your debt problems. Experts can analyze your debt situation, and the company’s debt settlement services can often put you on track to becoming debt free. Addressing your debts right now can improve your financial situation so you’re more resilient when the next recession hits.
Get Ready for the Next Recession Right Now!
No one knows when the next recession will hit. However, despite that uncertainty, everyone can start getting ready today to lessen the impact of an economic downturn when it does occur. Consider the four tips discussed here and put them to good use; they can help you strengthen your finances and give you the peace of mind you’ll need before the next recession.