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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 “illness” 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 things really hit 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. 

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38 Comments

  • Reply
    Kathy Strobos
    March 17, 2020 at 9:33 pm

    Thank you. This is reassuring. I will definitely try to follow your advice.

    • Reply
      Aren Lodge
      March 17, 2020 at 9:40 pm

      You’re awesome Kathy! Thanks for commenting! I really hope the economy doesn’t get as bad as 2008, but all that matters is that we do what we can.

      • Reply
        Zanaposh
        March 21, 2020 at 10:01 am

        Awesome post for a time like now.

        • Reply
          Aren Lodge
          March 21, 2020 at 7:03 pm

          Hi Zanaposh, thanks for commenting! 🙂

  • Reply
    Niki
    March 18, 2020 at 1:42 am

    This is so helpful, especially right now with some families having to live off of less income if their jobs aren’t providing compensation. Thanks for the tips.

    • Reply
      Aren Lodge
      March 18, 2020 at 9:57 am

      Thank you Niki! It’s all happening so quickly, a lot of us are unprepared. On the bright side, we still have some time before the storm! Thanks for commenting! 🙂

  • Reply
    Erin
    March 18, 2020 at 11:43 am

    We’re in a scary situation but these are some really helpful ideas to be prepared financially.

    • Reply
      Aren Lodge
      March 18, 2020 at 4:07 pm

      Hi Erin! It’s an unsettling feeling indeed, but the best thing we can do right now is to calmly lay out a plan. Once we say to ourselves “Ok ,this is what I’m going to do”, our inner confidence overpowers any fears society or the media attempts to instill in us. Thanks for commenting! 🙂

  • Reply
    melinda
    March 18, 2020 at 12:51 pm

    Great advice, thanks for posting.

    • Reply
      Aren Lodge
      March 18, 2020 at 4:08 pm

      Hi Melinda! Thanks for commenting!

  • Reply
    rasi gupta
    March 18, 2020 at 9:11 pm

    Absolutely useful points! Young people should especially pay attention to this as they begin their independent lives😃

    • Reply
      Aren Lodge
      March 18, 2020 at 9:15 pm

      Thank you Rasi! Yes, this is very important, especially for those young people who don’t have financial support from their parents!

  • Reply
    Aliana
    March 19, 2020 at 12:41 am

    This is great! I wish I had started learning about finances at a younger age. I have really been into reading Dave Ramsey a lot so I’m slowly starting to be smarter with my money!

    • Reply
      Aren Lodge
      March 19, 2020 at 1:40 am

      Ah Dave Ramsey, I know him! 🙂 Although I’m in my 20’s I’ve definitely made some pretty big money mistakes from 18 to now, that I’m slowly accepting and moving on from. Honestly it starts with parents teaching what schools won’t. But we have the ability to change our mentality regardless of how we’re raised. That’s my goal as a mom now, to teach my little one better than I knew growing up. Thanks for commenting Aliana!

  • Reply
    Devin
    March 20, 2020 at 7:26 pm

    Awesome tips! I am started to read up a lot more about finances.

    • Reply
      Aren Lodge
      March 20, 2020 at 7:35 pm

      Thanks Devin! This is definitely the time to read and develop a game plan! 🙂

  • Reply
    Kari
    March 20, 2020 at 8:50 pm

    Not panicking is the most important thing to do yet it can be the hardest!

    • Reply
      Aren Lodge
      March 21, 2020 at 1:48 am

      Yes Kari! We will never know what exactly will happen next, so staying calm even in uncertainty will help! Thanks for commenting! 🙂

  • Reply
    Sharae
    March 20, 2020 at 9:25 pm

    Thanks for the tips! I tell myself that I need to save money. But I’m not very specific with myself on why I need to do it and how I’m going to do it

    • Reply
      Aren Lodge
      March 21, 2020 at 2:05 am

      Hi Sharae! You are thinking about it, which is an awesome first step! Thanks for commenting! 🙂

  • Reply
    Holly
    March 20, 2020 at 11:58 pm

    This is all wonderful advice! I really like last part of Don’t Panic. I have a hard time with that when things get rough, but I know I would feel better if I just let it go. Definitely will need to work on that 🙂

    • Reply
      Aren Lodge
      March 21, 2020 at 2:21 am

      Hi Holly! We all know life isn’t a bed of roses all the time, but smiling through it makes living so much more enjoyable! Thanks for commenting! 🙂

  • Reply
    Jessica Collazo
    March 21, 2020 at 12:50 am

    We have to be aware of the times we’re living in these are some good tips that we need to follow to survive this recession that is coming here

    • Reply
      Aren Lodge
      March 21, 2020 at 2:22 am

      Hi Jessica! I agree, awareness is key. And planning, detailed planning! Thanks for commenting! 🙂

  • Reply
    Sherry M Lee
    March 21, 2020 at 4:01 am

    These are great tips for recession-proofing our finances. If there ever was a time to recession-proof our finances, now would be it! I’ve already noticed a huge reduction in my spending just by having all of my kids’ activities cancelled.

    • Reply
      Aren Lodge
      March 21, 2020 at 7:00 pm

      Hi Sherry! Fortunately I have a newborn so we don’t have activities just yet, but reducing paid activities or swapping for free ones is a great idea! You’re on the right track! Thanks for commenting! 🙂

  • Reply
    Kristen
    March 21, 2020 at 6:28 pm

    Great tips, especially your bonus to don’t panic. We are in an interesting time right now and we’re unsure how this is all going to play out so it is important to keep our finances in check and no where everything is going.

    • Reply
      Aren Lodge
      March 21, 2020 at 7:06 pm

      Hi Kristen, I agree times are uncertain. Planning and tracking our finances is a great way to calm uncertainty. Thanks for commenting! 🙂

  • Reply
    Desiree at Fitmomology
    March 21, 2020 at 8:41 pm

    These are all great tips. These are uncertain times and it’s hard to not completely freak out. It’s always best to try to plan things so we can control whatever we are able to.

    • Reply
      Aren Lodge
      March 21, 2020 at 9:02 pm

      Hi Desiree! I totally agree! Only thing we can control is ourselves and how we react to this uncertainty. Thanks for commenting! 🙂

  • Reply
    Whitney
    March 22, 2020 at 4:33 am

    These pointers are so key with today’s current climate! Thanks for sharing. I plan on working on my debt and being strategic about what I will and will not spend money on when it comes to budgeting!

    • Reply
      Aren Lodge
      March 22, 2020 at 1:56 pm

      Hey Whitney! That’s awesome! And I’m right with you! Trying to clean house as best we can. Thanks for commenting! Btw, your blog is so helpful and gorg! 🙂

  • Reply
    Gabi
    March 23, 2020 at 7:59 pm

    I agree about stocking up and not panicking. Panicking will only make things worse. It’s important to be the best prepared as we can, and then ride it out. Thanks for the tips, Aren.

    • Reply
      Aren Lodge
      March 23, 2020 at 8:04 pm

      Hi Gabi! I agree, people are looking at this situation with an overly emotional point of view. It’s hard to plan the next steps when you’re not relaxed and thinking clearly. Thanks for commenting! 🙂

  • Reply
    Danielle
    March 24, 2020 at 1:10 pm

    These are really good tips to recession proof your finances. I will have to implement some of these in my other finances.

    • Reply
      Aren Lodge
      March 24, 2020 at 9:08 pm

      Hi Danielle, I’m glad to read this! Thanks for commenting! 🙂

  • Reply
    Supriya
    March 24, 2020 at 9:31 pm

    I started planning my finances at a very early age. And I am glad that I did it. Everyone needs to do it for sure

    • Reply
      Aren Lodge
      March 27, 2020 at 4:29 am

      Hi Supriya! You’re on the right track! And I agree, more of us should invest time into learning personal finance. Thanks for commenting! 🙂

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