Though not officially declared, a possible recession seems to be the most-talked-about thing these days.
According to a report by financial services company Bankrate, nearly seven in 10 US adults are worried about the possibility of a recession before the end of 2023. This anxiety may be due to 40% of people who stated that their current financial situation is not in order to weather such crisis.
Fortunately, financial advisors dropped some things to do now if you are worried about a future recession.
- Build up cash reserves. Niv Persaud, a Georgia-based certified financial planner, said that saving as much as you can would you help you ride out layoffs and hiring freezes. Building up your cash reserves gives you time to look for the right job instead of settling for the first job offer. Ideally, a single-income household should have a year’s worth of essential expenses saved in their emergency reserve while dual income households should have at least nine months worth of essential expenses.
- Pay down debt. High interest rates are expected to happen during a recession. That is why paying down debts is even more crucial before it happens. Putting this on your to-do list could save you over the long term and give you more money each month toward savings.
- Continue contributing to retirement investments. Investing, said Florida-based CFP Philip Herzberg, is actually ideal during market downturns. Strock prices are being significantly discounted so anyone can buy them at cheaper rates than usual. At the same time, ramping up your contributions to your retirement accounts is an especially good move to make before a recession happens.
- Consider switching jobs. A possible recession has not stopped the global employment market. In fact, unemployment rates from various countries have dropped to its pre-pandemic levels. A report released by Pew Research Center added that this may be a wise career choice as 60% of workers who changed jobs between April 2021 and March 2022 reported a wage increase.
Mark Hamrick, senior economic analyst at financial services firm Bankrate, said “As long as the job market remains firm or as firm as it is—that may not last forever—there’s still an opportunity for people out there if they so choose.”
Whether a recession will happen or not is still a global mystery. However, there is no harm in preparing for the worst and securing your financials to remain “very prepared” for the future.