How do you prepare for a recession and thrive?
A recession is when the economy experiences an extended and significant slowdown in two continuous quarters, usually due to a reduction in consumer spending.
Recessions occur occasionally throughout history and are nothing to be afraid of but worth preparing for.
Common signs resulting from recessions are high unemployment rates and job loss, lower wages, stocks falling significantly within the stock market, reduced consumer spending, increased business failures, and more.
There is a way to be on the right side of a recession so its impacts do not hit you hard, and that is by actively preparing yourself and your finances.
Here’s 16 ways on how people are preparing for a recession.
How You Can Prepare for A Recession
Do Not Panic, but Prepare
Worrying does not help as we think it does; it only makes situations worse. Being productive is a great way to combat feelings of worry.
A saying I try to live by goes, “Preparation leads to Prosperity, and Procrastination leads to Poverty”.
You never have to get prepared when you take the time to prepare continuously.
Protect your Income
Safeguard your income by doing what you can to keep revenue coming in.
Many jobs are cut during recessions due to business failures.
If you pivot to another job because your current one no longer serves you, secure another job before leaving the previous one.
Have Multiple Streams of Income
One income stream is close to no income stream, which is always risky.
Having multiple income streams not only aids in building wealth but also provides you with extra security to care for yourself should anything happen to one income, such as an unforeseen job loss.
Invest in the stock market, but ONLY what you can afford to lose
Investing is risky but highly rewarding.
Recessions can be a great time to capitalize on low-priced stocks in a down market.
Invest based on what you can afford to lose, and don’t use the money you will need right away to avoid pulling money from your investments down the line. $1s, $5s, $10s, and $20s are still investments too, no matter how small.
A tip I’ve found helpful is to invest in thriving companies during a recession.
Companies that specialize in selling items people need every day like groceries, toiletries, and medicine.
Lastly, spreading out your investments within your portfolio will help balance your risks and gains within the stock market.
Cash is King
Having cash on hand and readily available throughout a recession allows you to take advantage of immediate opportunities and emergencies that may arise.
A few opportunities to capitalize on reduced prices due to a recession are low home and car prices.
Save, Save, and Save More
Saving money is highly recommended because it allows you to provide for yourself and your loved ones in times of uncertainty.
Experts recommend keeping an emergency fund savings that has your bills and expenses paid for up to 3 months or more.
Do Away with Debt
During recessions, hard times and financial strain fall upon many people and businesses.
Interest rates on loans can rise, making it difficult to keep up with regular payments. A tip would be to pay down debts with the extra cash in your budget.
Avoid taking on any new debts during this time.
Build A Budget & Stick To It
A budget is a financial plan to monitor your spending and track all your expenses.
A budget saves money and keeps you accountable for your needs and wants.
Utilize Free Resources
Consider checking local resources near you that you can utilize for free.
An example of a free or low-cost resource is your local library, where you can choose from an array of books and have access to Wi-Fi and the Internet.
Stimulate Your Creative Juices with DIYs
DIY or Do It Yourself activities, are great ways to keep money in your pocket and are fun activities that can be done with family and friends.
Before buying something, consider doing it or making it yourself.
Stock Up on Necessities but Resist Panic Buying
Gradually build your pantry with essential items to sustain you and your loved ones.
Think about foods that can stretch to make multiple delicious meals.
Examples of what to buy to prepare for a recession would be dry and canned beans, rice, grains, oats, other canned goods, seeds to plant, vitamins, medicine and first aid items, water filters, and toiletries such as toilet paper and soap.
Plant A Garden
Developing a green thumb during a recession is an excellent skill to have.
Growing your herbs and vegetables is tasty, healthy and saves money.
Buy “Dupes”
When spending money on higher-priced items, check to see if they have a “dupe,” which stands for a duplicate.
Dupes are less costly and can be as effective as the real thing.
Expensive does not always mean more effective and better quality.
Learn To Live with Less
Minimalism may not be for everyone, but we can learn something by embracing living with less.
Embracing minimalism opens the door for deep reflection on consumerism and the materials we think we need.
Living with less teaches you that you do not need much to live an abundant life. Knowledge of this releases you from the clutches of mindless consumerism.
Nourish Your Mindset
Building wealth first starts within the mind.
Nourish your mindset by reading books and consuming content that broadens your knowledge about finance.
Take the time to develop new skills and perfect them so that you can add them to your resume.
Get Connected Within Your Community
Surround yourself with others who can uplift you during economic uncertainty and look after one another.
Exchange tips and tricks worth knowing and coming together as a community will help tremendously to combat feelings of loneliness and fear.
Recessions are occurrences that happen every so often throughout history.
Do not be alarmed when the time comes for one, but develop the mindset of preparing so you can thrive through it.
Take these tips and apply them to your daily life. It will not only help you through a recession but will also catapult your journey to wealth exponentially.
Comment below which of these tips most resonates with you. How do you plan to prepare?
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