Lately it seems like you cannot turn on a television, pick up a newspaper or even surf the Internet without hearing about the recession. People are in a constant state of worry and fear over the current economic situation, however, there are ways to prevent it from having a significant impact on your finances and the finances of your clients.
An article on recession tactics published recently in Investopedia by Amy Fontinelle lists seven proven steps that will help lessen the negative effects of the recession:
1) Have an Emergency Fund (Start building one now if you don’t have it)
2) Always Live Within Your Means (Reduce all expenses that are nonessentials)
3) Have More Than One Source of Income (Can you work another job? What about your spouse?)
4) Have a Long-Term Mindset with Investments (Don’t worry about volatility)
5) Be Honest About Your Risk Tolerance (Cut back risk if you are worried)
6) Diversify Your Investments (Learn the difference between efficient and inefficient diversification)
7) Keep Your Credit Score High (Check it often and do what you can to improve it)
Panic does no good. It is what it is. So stiffen your backbone and make the hard decisions. Be smart and safe with your money. By all means, start living within your means and protect your credit. Keep your score as high as possible. Pay off the small debts if possible. Have some money in reserve – you never know when you might need it. Stuff happens.
Learn about diversification. Inefficient diversification is not diversification. Invest in the whole market, not just one or two sectors. Try to find additional sources of income and reduce the amount of risk you are taking if possible. It will lessen your chances of being affected by a recession. Thinking long run will help you avoid making rash decisions with your money and will position you for market improvement.
I believe each of these steps will help you and your clients “recession-proof” your lives. We are all being affected, but some will thrive and some will struggle. No one can completely avoid a recession, but there are ways we can cope with it.
How are you helping your clients cope with this recession?
