May 6th, 2022 at 08:34 am

How to Survive in a Recession

Any economy will always have its ups and downs, it is, therefore, prudent to save against a rainy day when these challenges come up so we come out unscathed.  How can we prepare ourselves for a recession?

Unfortunately, we cannot foresee a recession happening because it is something beyond our control. But, we can take control of it by taking some precautionary measures for our finances and these are some tips on how to thrive in a recession.

First and foremost, you need to set aside an emergency fund. This is because when the economy plunges into a recession, it will have an adverse effect on your job and income. Therefore an emergency fund is some part of your savings that you have set aside for a rainy day.

Normally, people put about 3 to 6 months of their salary away and this helps them not to resort to borrowing to fund their expenses. Tough times will always be here but we need to save money for the unexpected.

Also, you have to prepare a budget for yourself and pay off your debt. Owing people is already a burden, but owing when there is a recession will only add more stress to your already stressful situation.

MORE ON: How to Survive in a Recession

To survive, you need to create a budget that reflects the income you earn and disburse it to the right account. By doing that you will identify where you spend the most and also cut off certain things or lifestyles that are not necessary.

Diversify your income. We have all heard the saying that doesn’t put all eggs in one basket. In a recession, the possibility of losing your job is high. Relying on just your primary income is not the best. You need to have other streams of income to fall when the going gets tough. It doesn’t always have to be a second job, you can rent a space you have and earn more. You could monetize the skills you have. If you are a writer you can do some freelance jobs, and an artist can put up their artwork on Etsy or Amazon.

Apart from diversifying our income, we need to diversify our investments too. If you have all your money tied in one investment,  an economic downturn would be a disaster for you. That is why you need to spread out your investment, and invest in bonds, stock market, or crypto. You can also invest in assets like land or buildings that appreciate in value even during a recession.

Conclusion

Prepare yourself against a recession. Use the tips above when the economy takes a dip. So that you wouldn’t have to fear because you are ready for it.

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