The Great Recession of 2009 almost led the United States into a Depression. Fortunately, that never happened, it it was just a bad recession. But there are signs that another recession could occur, spiking fear across the country. And recently, the Dow Jones industrial average had one of its worst days ever.
Since another recession seems inevitable, the question is: What can you do about it and how can you prepare? In the video below, the Youtube channel City Prepping goes over some steps you can take to prepare yourself and your family for the coming recession.
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Here’s a brief summary: There are two types of preparedness when it comes to financial crises: defense and offense.
Make sure your finances are healthy and in order.
This means you should not be living paycheck to paycheck or burying yourself in debt. Both of those factors could lead to personal financial disaster if the country enters into a recession and your job becomes a casualty. Here’s what to do:
- Build an Emergency Fund
It should be liquid, meaning it’s easily accessible and without penalties or fees. Save enough to cover three months of expenses. Six months is preferable and remember, this is for a bare-bones budget.
- Get Out of Debt
Do all you can to pay off debts especially any bills with high interest like credit cards. It’s best to start with your smallest debt and then move on to your next smallest debt. And while you’re at it, avoid any new debt.
- Avoid Using Credit Cards
Credit cards have the highest interest rates and tie up your cash. If you do use credit cards, pay off the full balance every month.
Start to get aggressive to build wealth.
Look for ways to maximize your income. You could also bill yourself every month with a regular payment that you save for investment. Here are some other things to consider.
- Maximize Your Professional Value
In a recession, the first employees to go are non-essential personnel. Essential employees add value while non-essential employees typically ride the clock. Here are some actions to consider:
- Learn new skills.
- Demonstrate that you are proactive and not afraid of new challenges.
- Acquire new skills like technology or certifications.
- Have a Side Gig
- Be an Uber or Lyft driver.
- Rent your home on weekends through Airbnb.
- If you have creative skills, work as a freelancer.
- Adjust Your Investment Portfolio
401K accounts took the biggest hit during the recession of 2009, mostly due to stocks. Consider safer investments like bonds or precious metals like gold. And don’t forget to rethink volatility and risk with any mutual funds you may own.
More a more thorough look at how to prepare for a recession, check out the video by City Prepping below.