The thought of a looming recession can be frightening. It is important to remember that a recession is just one part of the economic cycle. While no one wants to go through a recession, hiccups in the economy do occur and are normal. Preparing yourself and your family can reduce stress and help you weather the problems associated with the storm.
Beef Up Your Emergency Fund
Even if you consider your emergency fund fully funded, it never hurts to add some additional cushion. If your emergency fund is not fully funded, or you do not have one at all, this should be the number one priority. Look at ways you can cut back on expenses to put money aside for savings. Having money in place for emergencies is one of the best ways to ensure that you can navigate through a recession.
An emergency fund is important for a variety of reasons. If you lose your job or your hours are cut, having a cushion in place to help with expenses is invaluable. An emergency fund allows you to pay expenses without depending on credit. Once you start using a credit card to pay for things that you cannot afford, you can quickly find yourself in debt. Setting up your emergency fund in a high-yield savings account, not connected to your regular bank, makes it easier to save. You can access the money quickly if needed, but you are less likely to touch it for non-emergencies.
Return to School
If you are in an industry that is likely to suffer under the weight of a recession, a career switch may make sense. Returning to school to earn a degree in a more lucrative or in-demand profession allows you to focus on your education during the recession, and ideally the storm will have passed when you graduate. If not, you will still be in a solid position to transition with your new skills. Private student loans allow you to attend school and cover living expenses while you earn your degree. These loans have no borrowing cap, so you can borrow more than what is permitted under federal student loan programs.
Some people are natural at building networks, while other people struggle. Having a solid network of people, both in your industry and outside of it, is valuable at times when the economy is struggling. Having connections allows you to reach out to others if you find yourself in need of a job or advice. A strong network is not something that happens overnight. During times of economic downturns, companies often cut costs in many ways. This may include putting a stop to unnecessary travel, such as for conferences and other networking events. With this in mind, start working today to build your network, you never know when you will need them.
If you are carrying any credit card debt, make an effort to pay it off. Do not take money from your emergency fund to do so, but prioritize paying down debt as quickly as possible. If your credit score is decent, consider completing a balance transfer to a lower or zero interest card. Taking these steps proactively can save much money and stress later on.