In tough times, you see different reactions. Some folks freak out, while others get ready, and a few even find ways to benefit. What do you think are the best ways to keep your finances secure in both the short run and long haul? Just to clarify, I’m not trying to cause panic about a recession looming, but I believe it’s good to discuss these issues to stay ready and dodge the worst outcomes.
Nothing than cutting down expenses.
Stay mentally strong that the recession will someday be over.
Thinking of other small businesses to start. You must not start big.
My honest answer is people should break up with their partner.
I think people spend really high/not balance with their income is because they take a responsibility about someone else life, either partner or child. Even when we're single, sometime we still need to give some money to our parent/family.
So, I'm sure if every person choose to be alone and work, they won't suffer financially difficult.
During a recession it is very difficult, if you prepare at this time it will be very difficult, people who are looking for opportunities at that time must have had preparations before the recession occurred so that when the opportunity arises they can execute it, and yes today is the time when we can prepare ourselves to face a recession that might occur with a strong financial situation, such as having thick savings in the form of cash, emergency funds and so on, assets that are inflation resistant such as gold or bitcoin and also having a good place to live. worthy.
It is stupidity to assume responsibilities of someone's life, when the person is neither your wife, your child, your younger siblings who has nothing to survive on or your aged parents. We can't neglect taking care of our child because we brought that child into this world especially when the child is still little and can't survive on it's own.
Our aged parents needs our support because they stood for us when we were young had nothing. Our younger siblings because we are family. There's no way we can live alone unless you don't have a conscience to support those that are family. You can only decide to live alone, if you don't have a wife, children or parents to take care of.
Recession is what we do not pray for, but it will be happening once in a while in a lifetime, so it's wise to plan ahead for it. So no one should think otherwise than to appreciate you for bringing a discussion like this forward.
I can think of four major aspects to work on before and during recession, which are:
1. Preparation for emergency funds by prioritizing savings.
2. Debts payments. This is especially the high interest bearing debts. They are killers in a time like that.
3. Try as much as possible to increase your income sources. Your job cannot be guaranteed during a time like this, as many established lay off workers. Some will also cut the salaries of their workers to stay operational.
4. Try to invest. No investment is too small, and who knows, it might be the source of income at that time.
The question presupposes that financial safety is a stable category, which is the first problem. What was safe in 2008 (cash, bonds) was destroyed by inflation in 2021. What had been effective in the 70s stagflation (commodities, real assets) failed in the 80s. Safety is always a retrospective event
The three groups you mentioned are separated by the speed of information processing and control of emotions in the face of uncertainty. The panickers are correct in their threat detection but lack flexibility in their response. The ready have plans but tend to engage in the last war. The opportunists? They have already mourned their losses, and this leaves them with cognitive space to identify dislocations when everyone is paralyzed
Recession strategy may be regarding optionality in the case of re-pricing of systems. That is: transferable skills between collapsing industries, non-transactional relationships, and sufficient liquidity to wait until forced sellers are forced to sell, without becoming forced sellers. The drab solution is the right solution: low fixed costs, high flexibility, diversified sources of income
However, no one wants to know that it takes sacrificing optimization in the good times to build resilience. We would prefer to think that there is a shrewd trade that is rewarded in both cases
Suggesting that people abandon their responsibility the minute things get tough is a funny one. Before taking on that responsibility, you knew what you signed up for. Running away when things get difficult is irresponsible. If you know you can't take care of your partner alone financially, then they have to also work. It doesn't even make sense to have a partner who is able to work and yet doesn't work. It also doesn't make sense to take on responsibility you won't be comfortably able to handle, be it a partner or kids.
On this, I can say don't take responsibilities you can't handle under pressure, don't get a partner or kids unless you can fully take care of them in all circumstances, and if you already did, don't run away simply because things get tough.
The secret is to always be up to date with the news and the direction of the economy, so you can be a little more assertive and execute the most correct strategy to keep your money safe. There are economic cycles, it is essential for anyone to study this and understand how it works, it is basically what each of us needs to have financial success.
Continue saving and investing, and re-investing as much as possible, so that when recession comes, you wont be fully bothered and affected because you have already prepared so much to stay financially safe and secured. After all, recession wont take longer, and it wont run out your established finances if you know how to manage it wisely and track your expenses.
Its always better to be forewarned and forearmed than to resort into panicking and selling at loss. You are in control of the situation, so stay motivated and proactive the whole time.
Cash is king if that happens.
So, investments and savings are important when that time comes. Or in general that it's always been. To avoid any unusual spending habits is going to happen for sure for the most of us.
Not eating out, unsubscribing all of those subscriptions for streaming. They're not important and the cost that we pay that could also be saved or used when that happens.
It boils down to determining what's important and what's not, so we go back to the basics about spending for needs against wants.
There's nothing important in claiming that we should go on recession, because this shows how things would have gone wrong to the extent of been more obvious beyond coping with, inflation will be more obvious as well and to afford a living will be more difficult for the masses, we may have to double up our sources of income then in other to be able to meet up.
There's something worse than a recession - that is economic crisis. However - there are several things you need to prepare for if you truly want to mitigate its impact, such as having an emergency fund and avoiding debt. Proper financial management and planning can save you from the negative impacts of a recession - but some other advice also states that increasing your sources of income can also be considered.
In my opinion - there are 3 important points that need to be prepared for bad economic conditions including recession or crisis, namely:
- Emergency budget/ fund
- Add sources of income and set spending
- Manage investments well and don't put all your eggs in one basket.
People should prioritize budget better, spend smarter. Do not just spend, but spend to invest to make more means of making money. And when that finally pays off, no amount of recession will kill your funds. And also, build a more stable emergency funds, separate from your personal savings, so that when unforeseen problems occur, your savings or investment profits wont be compromised, since you have a massive amount of emergency funds to cover your emergencies. And as always, focus on positivity, never be blinded by greed and fear.
In my country, there's a married couple who turned their thinking around, even though they didn't start from scratch. They're a middle-class family tired of spending their time and energy daily trying to earn just enough to survive until the next month. Finally, they decided to quit their jobs and decided to live independently from home. So, everything at home must meet their basic needs, hopefully, and then have value and be able to convert it into cash.
In principle, a home should produce value, whether in the form of food, energy, goods, or services. Then, reduce expenses through efficiency and independence. Improve your quality of life by being healthier, stress-free, and connected to nature.
Start by creating a productive mini-garden for food sources, using a vertical garden system, simple hydroponics, or planting in pots. Then, create a frugal kitchen by stocking up on basic homemade ingredients (spices, chili sauce, yogurt, bread). Save energy and water by converting used cooking oil into biodiesel, using mini solar panels for lights and water pumps, recycling washing water for watering plants, and storing rainwater for the garden. Then, produce from home (liquid laundry soap, candles, liquid fertilizer, processed foods) for personal use or sale. Finally, digitize your home by using the internet for non-entertainment purposes, selling garden produce, opening online classes, and creating educational content about self-sufficient homes for families to survive in a crisis.
Talking about facing a crisis also means talking about finances. Money must be separated between necessities, savings, and productive investments. For example, 60% should be allocated to basic needs, 20% for savings and emergency funds, 10% for investments (productive tools: solar panels, plant racks), and 10% for charity and social causes. Money spent should be allocated to productive assets, not for consumption (buying seeds). Keeping records, especially of cash flow and household production, is crucial to ensure indirect income is visible.
Saving and investing can be our salvation if a recession hits. But it depends. Saving can help you, but investing is not always guaranteed to do so, and that depends on the type of assets you invest in.
If you only focus on speculative, high risk assets like cryptocurrencies or stocks and don't exit in time before a recession hits. Your investments won't help because they are usually the assets that are dumped and perform the worst during a recession. Conversely, if you diversify or invest in safe haven assets, it can save you.
The general financial advice is to keep doing what you're doing when it comes to investing - add the same amounts each month through the good times and the bad. You may want to cut back a bit on luxuries if you spend a lot in that area, so your buffer increases when there is a higher chance of losing your job. It's usually a great time to buy assets because they enter distressed territory and people are desperate to cash out. If you have some liquidity at that point you can usually find lots of bargains. That what's the richest will be aiming to do during that period. Try to keep an eye on the company you're working in so it doesn't come as a complete shock if they fold and you can be prepared.
I think the best way to stay afloat in recession is to:
1. Get rid of all debt if possible, as the jobs won't be stabile anymore and there is high risk of not being able to pay the debt.
2. Learn skills that are needed in crisis such as fixing things and basic medical treatmant. In financial crisis people will not buy new things but repair what they already have so I believe learning that will be good way to spend your time now.
3. If you have garden try to grow your own vegetables to keep food expenses lower.
1. Try to keep your job whatever it takes cuz this is gonna be your main source income to keep financial stability.
2. Put some money into the hedging asset
3. Cut unnecessary expenses
4. Have emergency fund and try ensure you have no debt that may burden you. However, the first point is the most important thing.