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.
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 to recession-resistant businesses and their employees.
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.
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.
MoneySmartLife.org and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
The views, thoughts, and opinions expressed belong solely to the author, and not necessarily to the author’s employer, organization, committee or other group or individual; either in the past or future.
This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.” MoneySmartLife.org states that they’re using this material as part of their “efforts to advance understanding of issues of “financial well-being” and that they believe that this constitutes a “fair use” of the material in accordance with title 17 U.S.C. Section 107.