5 Things to Do to Prepare for the Coming Recession

1. Aggressively save money now. Cash is King during a recession. Have as much of it on hand as prudent. Build your emergency fund. This prepares you to withstand “stuff happens” and seize the opportunities a recession always provides.
2. Layup 30 days of food for your household. A loss of income can be softened by knowing how the family is going to eat. Having food on hand will allow using your money on other things.  Start by setting aside 3 days, then 7 days and finally 30 days. This food store is also used for disaster preparation and recovery due to weather events, natural disasters, and non-economic factors. Having a food reserve on hand is a MoneySmartLife strategy. This isn’t extreme prepping but it is being prepared.
3. Start a profitable side hustle. The loss of income is how most working-class families are impacted by a recession. That loss of income, if sustained, also causes a loss of wealth. The loss of wealth has a more enduring impact and must be avoided. The best way to do this is by having multiple streams of income. Make sure that your entrepreneurial endeavors are recession-proof by providing products or services torecession-resistant businesses and their employees.
4. Understand the difference between "wants" and "needs," then spend accordingly. Wants and needs are different for everyone. They are subjective and often emotionally driven. Despite those individual differences, everyone still spends in both categories. You may need a car to maintain your income. But the kind of car you purchase, beyond reliable transportation, is more a function of your wants. You know it’s a “want” rather than a “need” if you spend time justifying or rationalizing the upgrade.
5. Maximize your credit score. Excellent credit will allow you to take advantage of recession heightened sales incentives and lower interest rates. Both borrowing and buying become cheaper in a recession. Having excellent credit will allow you to access these credit-driven opportunities. Move your credit score up above 775 strategically and on purpose. During a recession, having and managing credit cards can be a component of your safety net. If your score is bad or takes a hit, start the recovery process now.

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