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Preparing for an Economic Downturn

Preparing for an Economic Downturn

Economic uncertainty remains despite an economy that has been growing in recent years. The massive recession that created such turmoil in the world’s economy and left many people struggling to make ends meet here in the U.S. is still far too fresh in the minds of many families to fully enjoy the current economy. Fears of an uncertain future have many savvy people looking for ways to boost rainy day funds should the good times end.

There are two primary ways you can make yourself less vulnerable to the many factors that made the last economic downturn so devastating:

  1. Get your finances in order.
  2. Make yourself immensely employable.

Preparing Your Finances

This step is the most complicated part of the process for many who live in a decidedly consumer-driven society. However, preparing your finances for rainy days, weeks, months, and years can make a world of difference when economic downturns occur by allowing you to weather the storm without losing your home or your security. These steps help.

  • Pay down debt. Eliminate the high-interest rate debt first, then take on other debt until only a home mortgage remains. You can then whittle away a little each month until your home is paid off.
  • Curb your spending. Eliminating existing debt is only helpful if you are not creating new debt just as quickly. The idea is to be in a position of financial parity if an economic downturn takes place.
  • Save your pennies. Current recommendations are to have enough money in savings to withstand six months to one year of unemployment. Considering that the official tally for the “Great Recession” was 18 months, many people will not feel comfortable until they accumulate at least that much in savings. The idea is to have enough set aside to sustain you (with diminished spending, of course), for an appropriate amount of time.
  • Eliminate unnecessary spending. Oddly enough, many Americans are paying so many different recurring subscription fees each month that they have forgotten that they are paying for them. There are a variety of apps, like TrueBill, that will help you identify and eliminate these unwanted, unused charges saving you money every month.
  • Downsize your expenses. One of the best things you can do to improve your financial situation is to spend less on everyday items. For instance, instead of going to Redbox or On Demand for movie rentals, consider your local library instead. Switch your mobile phone service to one that offers month-to-month payments instead of contracts and use your home or office Wi-Fi to reduce your cellular monthly data fees. Finally, cut the cable cord. There are plenty of services available, at a fraction of cable’s cost, that provides live programming and more.

Making these changes a process that requires time, patience, and dedication to accomplish. However, taking the time to do so can yield tremendous results and create a more favorable financial situation for the next recession or retirement – whichever comes first.

Exploring Employment Options

One of the most significant problems people faced during the previous recession was one of employability. With so many companies letting experienced players in various fields go or laying them off, the job market became flooded with highly qualified candidates in every industry. There are some things you can do, now, though, that will help you have a competitive edge if and when another recession occurs.

  • Update your resume often. Every single time you have a victory in the office, add it to your resume.
  • Learn new skills. From company-sponsored workshops to field training, and even to classes you take on your own time, every new skill you learn, certification you acquire and achievement you accomplish needs to be added to your resume.
  • Volunteer. That is an invaluable experience as well. Not only does it allow you to help others in an entirely humanitarian manner, but it helps you master new marketable skills – even if outside of your actual field of employment.

The more diverse your new experiences, knowledge, and skills happen to be, the more impactful the edge they give you in a flooded marketplace.

Doing these things to protect your finances and your employability might not help you from feeling the sting of another recession, but they will undoubtedly help numb its sting.

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