Money Matters

5 ways to recession proof your finances

There’s no way to completely mitigate all financial risk during a recession. All of us working adults have bills, and many of us have kids. So long as there is expense, there is risk. The current corona virus scare (which I feel is man-made, and being spread on purpose… let’s not dive too deep here) is said to be threatening a global recession. This affects those relying on steady paycheck jobs, as well as those self employed who rely on inconsistent income to begin with. Both categories will experience uncertainty regarding income, if we’re lucky to earn anything at all. 

Whether single, a couple, or a family, now is a good time to regroup and discuss your financial plan for the coming months. Here’s 5 ways to recession proof your finances – and decrease the odds of going into bankruptcy. 

  1. Create a visual of your current financial picture. Type it out, write it out, or create a vision board. Just get your current assets and liabilities out on paper. You need to know every possible threat to your financial situation. Once you see it, and it becomes your focus, you can plan your steps accordingly. 
  2. Reduce your debt load as much as possible. Most of us don’t have the liquidity available to wipe our slates completely clean of what we owe. But your current source(s) of income is not guaranteed. The more you balance your asset to liability ratio (get as close to a positive net worth as you can even if that number is zero), the less stress you’ll have when shit really hits the fan. 
  3. Instead of JUST making a budget, get clear on what you will and will not spend money on. And stick to it. Budgets change as our income and expenses change. Once you decide what’s worth your money, your budget won’t really matter. Fixed expenses (food, laundry, shelter) have to be paid whether your “budget” allows it or not. Variable expenses are negotiable. 
  4. Stock up. You can take that however you wish, but I am referring to household goods. Food, toiletries, first aid. Things you (and/or your family) use daily that on any given day, cash won’t buy. We can experience major inflation, and/or low stock in stores which means the essentials aren’t available for purchase even if you have the funds. You never know. For those living paycheck to paycheck, it‘s better to have food and household essentials available to last you however long you’re able to afford, than to have nothing at all. So stock up while you still have an income. 
  5. Do not dump all of your investments for 100% liquidity. There is always opportunity for profit during a recession. If you aren’t in dire need of cash (to stock up or pay off debt), allow your money to continue working for you without worry. There’s no way to avoid losing money. You will lose some, but the potential to gain is worth so much more. 
  6. Bonus Tip: Don’t panic. Do what you can. And don’t feel bad if you can’t. Accept your efforts, have faith, and ride it out. 

I’m hoping the recession talk is just that.. talk. But the way current events are rolling out, it’s only logical to expect one. 

My inspiration for this post:

Thoughts? Share a comment below!

-Aren. 

Are you a blogger, youtuber, or podcaster? Do you want to grow your audience? Join the Blog Network Engage platform on Facebook and promote yourself!

Money Matters

Use your tax refund to pay off debt in 2020.

I used to use my tax refund as regular income, paying bills, buying food, ordering personal items on my wish list. Every year I look back and think how many “windfalls” I’ve squandered and how I could’ve been much better…

Ask Aren

How to #upgrade your life.

I’ve been saying to myself for the past 3 years that I wanted a new wardrobe. A new style of dress. 24, still wearing fast fashion from high school, that’s not inspiring. I’d also complain about my environment and…

Ask Aren

Why I wish I never went to college.

What marked adulthood for me was struggling to pay these bills. It’s hard for me to make this (title) statement with surety because I’ve developed very much on this journey. In a positive way. But you have to choose…

Money Matters

How to Not Be #Broke This Winter

There’s a lot going on this season. I’ll let you in on it all, post by post in 2020. In the meantime, here’s what I’m doing to save money this Winter 2019. Not going out to eat. Now is the…

Money Matters

The gap. (That no one talks about)

Frustration kills me every time someone learns I’m “taking time off” from college to pay back money I owe. The reply is always “you didn’t get financial aid”? Or “why don’t you apply for financial aid”?  YES. I have…

You cannot copy content of this page