Do you believe we are heading for a recession? Maybe we are already in one? Either way, here are 2 financial moves you need to make before a recession.
In all honesty, these are two moves you should make regardless of whether or not you believe economic recession is on the horizon.
Nevertheless, sometimes people need that punch to the gut or fear of, in order take necessary action.
If you know a storm is coming, you prepare for it.
But sometimes disaster strikes when you least expected it.
However, if you set aside the right provisions, you will lessen the blow and/or get through it altogether largely unscathed.
With that, here are the 2 financial moves you need to make before a recession.
1) Build an Emergency Fund
It is important that you have money set aside for emergencies.
Sadly, surveys have shown that 56% of American couldn’t cover a $1,000 emergency expense with their savings.
Unless you are really wealth and/or already have multiple streams of income coming in, your job is likely your main source of income.
But what happens if your job disappears?
How would you provide for yourself and/or family should you lose your job? How would you pay the rent or mortgage?
What about any medical issues (especially if your health insurance comes from your employer)?
It is strongly advised by many that you have 3-6 months of money in your savings account to cover all expenses in the event of job loss.
Start by calculating your basic monthly expenses and use that number to build an emergency fund.
2) Reduce or Eliminate Your Debt
When economic turmoil or recession hits, it is always best to have little or no debt.
Think of debt like chains and anchors tied around your body. The more you eliminate, the better off you will be. The freer you will be.
The average American household had an average of $5,221 in credit card debt in 2022 (nearly $850 billion in total US credit card debt).
When emergencies happen often the solution most people adhere to is to put these expenses on credit cards and/or take out loans.
This of course, sends you into the red and often leaves you more in debt with more to pay it off each month (often at high interest rates).
In addition, once a recession does hit, you may find it harder to get a loan or credit due to lenders becoming more risk adverse in the wake of economic uncertainty.
The less money you own when financial turmoil strikes the better off you will be. This is especially true if you lose your job.
Pay down as much debt as you can!
Conclusion
There are 2 financial moves you need to make before a recession strikes.
Build an emergency fund and reduce or eliminate your debt.
These are two moves you should make regardless of a recession for your own financial well-being.
However, these moves take on greater importance during economic turmoil. You will be glad you made these moves before the storm hits.
Happily, I currently have zero debt and also have over $8,000 in my savings account as an emergency fund.
In addition, I’ve also built a six-figure portfolio of dividend growth stocks that generates a yearly average of over $1,000 per month in dividend income!
That is passive income that I earn while I sleep!
If you are interested in beginning your own journey into dividend growth investing, personal finance, and financial freedom, check out my Getting Started page.
Also, don’t forget to Subscribe for more great content and updates! 🙂
So, how about you guys? Do you think a recession is coming? Or are we already in one? Also, are you prepared for the storm?
Let me know in the comments below!
Like this:
Like Loading...