The odds of a recession occurring in the next 12 months are at 70%, according to a recent survey. Many people are justifiably concerned about what a recession could mean for their financial health. Here are some steps you can take to ensure that you not only survive but thrive during a recession.
1. Create a Budget
You can't protect your financial future if you don't know where you are in the present. You don't need fancy software or a finance degree to make a budget. You can track your income and expenses by using an Excel spreadsheet. If you want to attach an invoice or a bill to your spreadsheet to help with tracking income or expenses, follow steps to embed a PDF in Excel. Using this strategy makes it easier to find your documents than if you store them in a separate file.
Examine areas where you can cut some of your expenses. If you pay for a house cleaning service or eat out frequently, see if it makes sense for you to cut back.
2. Lower Your Cost of Living
The availability of remote work makes it easier than ever to relocate to save money on your cost of living. Whether you want to move to a cheaper city or an entirely different country, be sure to research the average cost of housing, education, healthcare, groceries, fuel, utilities, and other necessary items before you make your move. If you need to find a new job, ensure that you know what income you can expect to earn. Salaries are often lower in places that are cheaper to live in. If you lose too much income when you relocate, you may not be improving your situation.
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3. Reduce Your Debt
Carrying a lot of debt going into a recession is a high-risk proposition. If you are already carrying close to the maximum amount of debt you can afford to repay, small changes to your income or expenses could push you over the edge and once you get behind on payments it can be difficult to catch up. Avoid taking on any new debt and take steps to reduce the debt you already have.
4. Increase Your Income
It is difficult to substantially increase your pay without getting a new job. Another way you can boost your income is to start a business. Choose a recession-proof business idea, such as childcare, repair services, or accounting.
These businesses are recession-proof because people still need someone to care for their children while they are at work, and demand may go up as more families need two incomes to get by. People may choose to get items repaired instead of replacing them during a recession. They also need to file their taxes and may have a greater need for financial advice when times are hard.
5. Save Money on Home Repairs
An unexpected repair bill for your home can tank your budget when finances are already strained. While homeowners insurance protects you if your home is damaged, it doesn't cover wear and tear or breakdowns. If you want protection from large repair bills, you need a home warranty. Warranties can cover breakdowns to cooling, heating, electrical, and plumbing systems and appliances. Contracts usually renew on an annual basis.
If the prospects of facing a recession have you worried, taking steps such as purchasing a home warranty and starting a recession-proof business can provide you with peace of mind. If you have a job, it's a good time to start or beef up your emergency savings too!
A few years ago, burned out and miserable from his job in corporate marketing, Lance Cody-Valdez decided it was time to invest in himself. He quit his job the following day and used his meager savings to stay afloat as he built a career as a freelance writer and content marketer. He created free-lance-now.com to help others use freelancing to escape the 9 to 5 daily grind.