Have you heard that the United States economy is doing great or that we’re heading for a downturn? Regardless of the source of your information, take it with a grain of salt. While it’s important to pay attention to the big economic indicators, there’s no way to accurately predict exactly what the economy is going to do from one year to the next. There are too many mitigating factors. The best you can do is start planning now for the next economic slowdown so that you’re protected financially when it occurs.
Preparing for a financial recession, rather than getting caught off guard, is critical to your future. From a personal standpoint, being prepared can mean the difference between losing your home and having the means to weather a job loss or pay cut. If you have children or others who depend on you financially, you need to plan for their future as well. There are a number of things to do to properly safeguard against a potential change in your financial status.
Start your planning here
One of the best steps you can take toward financial health is to pay down high interest debt. During a recession, you may only be capable of making the minimum payment on this type of debt, and the interest will quickly compound the amount you owe. It’s also important to keep investing, particularly during downturns. Buying investments when prices have dropped sets you up to realize good returns when recovery happens.
Another thing to think about is ways to cut costs now rather than waiting until your income drops. Look for sites that help you price-compare among internet providers, TV services, cell phone companies, and more. Lowering your monthly “nut” will help you weather financial ups and downs over time. In addition, set up an emergency fund, perhaps 3-6 months of living expenses. Maintaining a rainy day fund helps you avoid having to borrow money simply to get by should your circumstances suddenly change.
If putting money aside is impossible given your current income stream, consider finding a source of supplemental income. Taking a second job, even temporarily, can help you set up the all-important safety net.
It’s never too late
Planning for a recession is a good idea for those of us who are no longer working as well. Speak with your financial advisor about investments that tend to be more recession proof and those that make sense to buy into during a downturn. Wealth management for retirees is just as important, if not more so, than for people who are mid-career because their money has to last indefinitely.
This is our wheelhouse at Blankinship and Foster. We offer personalized financial planning services to people in all stages of life. And it’s our goal to design investment strategies for our clients that can withstand the ups and downs of the market. Call today to set up a free consultation with one of our financial experts.