Usually, when people hear the word recession, it sends all types of feelings and chills down their spine. The economic definition of recession that contains all about how there has been a drop in the overall economic activity of a nation visible in the gross domestic product isn’t really interesting to a lot of people. What people typically understand as recession is a drop in the value of money and of course the amount of time it takes for individuals to make it back to the point where they can comfortably pay their bills. Probably due to the amount of companies that lay people off or the significant drop in their income.
Simply put, to the lay man, a recession is a nightmare. Over the years, the world has experienced some recessions and it comes and goes before even the economists can grapple what’s going on. The only problem is the fact that even after the recession is over and there is a record of progress in economic activity and growth, its impact somewhat posthumously is disastrous to families and individuals who find it very difficult to get their lives back. While these recessions are out of our control as individuals, you could prepare for rainy days just so you are not caught without an umbrella. In this article, we will discuss some things that you could do to get you prepared for the next recession.
Savings
While this may be underrated, this is one of the things that has kept a lot of families and individuals even in emergency situations. You should create an emergency savings. Usually this should be able to take care of your bills for up to 6 months. This might sound outrageous but if you have a family that is dependent on you, you should definitely take this option. While this may sound very difficult and probably far fetched, the goal is one step at a time. Save every month from your paycheck.
Try to save at every opportunity you’re given. If you can change the neighborhood you live in to another and save money on rent, you should. Eventually you will beat the 6 months threshold and aim for a year. Think of it this way, if you were to lose your job today, would you have enough money to keep you for a minimum of 6 months if you couldn’t get a job immediately? If the answer is in the negative, you should start saving now.
Debt Management
As much as we all try to avoid getting into debt, it is almost impossible. Try as much as possible to get rid of the heavy debts and control the much smaller ones. With the next recession seemingly around the corner, taking care of debts is essential. You do not want to enter the recession with maxed out credit cards as you may need them to make ends meet.
If you are concerned that you are not ready for an emergency or unexpected financial burden, you are not alone. You should speak with a debt counselor. Elias Dsouza is a skilled and experienced debt negotiator and counselor. Contact Elias today for a free consultation.
