Nowadays, it’s hard to share plans with friends. The interjection “In this economy?“ is the most probable answer to almost any good news you share. But it comes as no surprise. The global economic market has gone through unprecedented shock waves and turbulence, and you can’t ignore the inflation anymore. It’s everywhere. Some experts are starting to mention the term “recession“ here and there, but there is no consensus yet whether the recession is inevitable or rather much avoidable at this point.
Some say inflation will ease out by September, but others aren’t that optimistic. We believe in hoping for the best but preparing for the worst, and so, here’s our humble guide on how to best prepare for a possible recession.
First of all, let’s take a short scan of the current state of the market. We hear words of warning from major players in the economic field, such as Bill Gates and Warren Buffett. We see the stock market struggling, we hear of more and more people getting rid of their stocks. To understand the complexity of the full picture, we suggest watching this video explaining the current state of the economy through the mirror of past recessions:
Now that we more or less understand the complexity of the situation and the possible obstacles the economy might be forced to overcome, let’s examine how we, as individuals, can navigate this field safely.
We are sure you have your savings. Everybody does. Our tip would be to make sure that you have enough in your savings for three months' rent or mortgage payment, plus your insurance deductible. Once you do this, you can let go of the gas pedal and move on to re-budgeting your debts, as specified in the next tip.
Retirees should have at least a year's worth of expenses in cash in their retirement account.
Governments around the world are increasing interest rates to help combat rising inflation. This means that loans for houses and cars will now come with greater interest rates. So now is the time to tend to those.
Rearrange your budget to quickly and safely pay off your debts. Here’s how: add up all the minimum you must pay on all your debts. Arrange all your debts in a descending list of interest, excluding mortgage. Anything with an interest of 5-7% should be a top priority. Now rearrange your budget and determine the maximum amount you can afford each month to pay off your debts.