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Many times, recessions take people by surprise, but that won’t be the case this time around. In fact, financial experts have been predicting a mild recession in 2023 for a few months now. If that causes you a bit of anxiety, you’re not alone. But you also don’t need to worry! If you start planning for recession times now, you’ll be able to face it with confidence in your finances.
Below, we’ll get into our best budgeting for recession tips. By following these, you’ll have the chance to keep your lifestyle stable and might even have the ability to afford a few extra things during this recession!
Top 5 Planning for Recession Tips
1. Assess Your Financial Priorities
Before a recession kicks in, you should take stock of your financial priorities. To do this, first, take into account what you need to spend. Some common necessary expenditures include housing and utilities, cars and transportation, medical expenses, and food. Go through each category and determine how much money you regularly need to spend.
This will be the bare minimum amount of money you’ll need during the recession. So, you’ll want to make sure you always have at least this much in your bank account.
2. Plan for Emergencies
Of course, no one can predict how much they’ll need to spend on an emergency. But you’ll be in a much better place if you set up an emergency fund and make regular contributions to it.
If you need help figuring out how much you can afford to put away for emergencies, talk to a financial advisor.
In addition, you’ll have fewer financial emergencies if you have insurance. Check out Lemonade to learn how they can help you save on renters, homeowners, car, pet, and term life insurance.
3. Repay Debts
If you have any outstanding debt, pay as much of it off as you can before the recession. That way, you can dedicate more of your recession paycheck to other necessities in your life.
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4. Work with a Professional on Investing
Investing might seem counterintuitive during a recession. Many people experience a phenomenon known as “loss aversion.” This means they are more likely to feel distressed over losing money than they are to get excited over gaining it. So, many investors panic and want to sell when a recession hits.
But, if you sell while shares are tumbling, you’re actually selling for a loss. There’s a strong chance that the share will get you money again once the market climbs back up. So, the best budgeting for recession plans still keep long-term gains in mind. If you feel the need to sell, you should talk to your financial advisor before doing so. Having personalized advice will help you know whether selling really is your best bet.
5. Brush Up on Your Career Prospects
A recession isn’t necessarily the time to quit your job. After all, a fair number of companies will have to lay off their workers. So, the market will get saturated with competition.
You might want to brush up on your career prospects in case you end up being one of these laid-off workers. Take a look at your resume and make sure it’s up-to-date, take a look at who’s hiring, and figure out ways to make yourself more appealing to potential employers.
That way, even if you plan on staying in your job, you’ll have a backup plan just in case.
Getting Your Family Ready for a Recession
Planning for recession times involves more than just following good financial tips. It also includes finding fun alternatives to what your family normally does! Instead of flying, learn the best tricks for taking a road trip. Make some travel packs while you’re at it, too!
