Whether we believe it or not an economic downturn is upon us. Unemployment is at an all time high, businesses are shutting down, the Federal reserve has lowered rates. Since the epidemic outbreak most of us are worried about our financial stability and families well-being. I will be listing a few tips on how to prepare for an economic downturn to help you be less worried and more prepared.
1.Suplement Your Income
Supplementing your income is a great way to help you reach your goals faster, some clever ways to supplement your income are blogging, vlogging, selling some unwanted items, completing online surveys and much more
2.Top UP Emergency Fund
I can't stress this one enough, having an emergency fund is crucial, these funds can help you cover unexpected expenses or possibly be replacing lost wages. Emergency funds should have enough to cover 3-6 month of current expenses.
3.Find Ways to Cut Extra Costs and Check Your Spending
Best way to cut extra costs is to make a list of all your spendings, figure out what is a necessity and what isn't, cut back on the cable bill, review your cell phone bill and shop around for lower insurance rates. You can have extra cash just by cutting back on some expenses.Many financial experts recommend following a 50/30/20 budget here is what this means 50 percent of your income goes to necessities 30 percent goes to wants and 20 percent goes to savings, investments and possibly paying off debt. If you don't already have a budgeting tool you're using the 50/30/20 is a great place to start.
4.Maintain Regular Investments
Going back to cutting expenses, stopping contributions to investment accounts is not one of them; you'll want to continuously contribute to your 401(k), IRA’S and any investment account you may currently have. It may be difficult to invest during economic downturns however investment accounts will have long termed benefits for investors. It is almost impossible to time the market but long term investments will have future upswings and you will be the one to benefit.
5.Invest in yourself and Your Skill Set
Yes, unemployment is on a rise and we will surely see more and more people being laid off and more companies will be closing and yes certain things will become more difficult. We must understand that we are our biggest asset. As some businesses are tarnishing others are blooming while we may not be prepared for such drastic changes that the current times have brought upon us we must always sharpen our skills, invest in our mindset,skillset and overall well being.
The Bottom Line
Despite the fact that no one can predict when an economic downturn will happen or how long it will last we can most definitely be prepared for one. Unexpected events happen, the market rises and falls over and over again, people change, companies come and go, jobs come and go, factually every downturn ends up with a stability. Preparing now will give you a peace of mind during uncertain times as well as benefit you when the economy starts to revive.
“We fell asleep in one world and woke up in another”,this is the time to invest in yourself, sharpen your skill set, revolutionize the world and flourish. We are all in this together. Remember to stay positive and appreciate everything around you.