Unless you’ve been dancing to the newest CardiB album under a rock like me, you already know that the recession is coming. Is it here yet? Nope. Is it definitely coming? The official financial analysts that seem to know all the things about finances seem to agree that come the fourth quarter of 2019 to the end of 2020, we will see yet another recession hit our economy. But it’s not here yet so you still have time to recession-proof your life.
What Is A Recession?
In layman’s terms, a recession is when the economy starts shrinking instead of growing. Depending on what economist you ask, this happens when the value of goods/services produced declines for 2 consecutive quarters. Sometimes recessions are really long and sometimes they’re short limiting the damage.
The most important question is when do they end. A recession ends when the growth comes back. Simple, right? Or not since the recession officially ends when the society recognizes it which can take some time.
There are two main things that can soften the effects of a recession:
- Cut interest rates to encourage people to borrow and spend more. This is tough now since interest rates are already pretty low.
- Stimulate the economy by adding jobs, boosting productivity ultimately increasing the economic output.
Realistic Ways To Recession-Proof Your Life
Full disclosure here: the talk about the recession scares the pants off me. Why? Because it’s something that I have no control over. Something that I always tell my kids is to focus on the things they CAN control so that’s what is getting me through my fear here. While I can’t control the recession, I CAN try and control how much it affects my family.
Have an Emergency Fund
I used to manage a bank (I’ve had MANY professions, ha!) and one of the things that I used to implore upon my clients is in having multiple savings accounts–one for emergencies and one not for them. Your emergency fund is NOT your rainy day fund, rather, it should have a couple month’s salary in it in the event of job loss or something else.
Don’t have one? Check out this graphic on how to save aggressively in one year.
Live within or below your means.
This is something that is a constant conversation that my husband and I have about our lifestyle. We just bought a new car and one of the things that we had to factor in was the new financial aspect that this brought in. But living within your means decreases your chance of going into debt for the basics when they go on the rise.
Have multiple streams of income.
This isn’t just a rule for entrepreneurs. Even if you have a full time job that is paying the bills, having extra income is great. This extra income can go to fuel your savings accounts and give cushion. Things like Uber, Lyft, InstaCart and Shipt all give many of us the opportunity to have additional sources of income.
Keep your resume up-to-date.
There’s no such thing as job-security–even when you’re an entrepreneur. One day you could be living la vida loca at your job and then next day you’re laid off. This happened to me the month before I found out I was pregnant with Mini. I wasn’t devastated since it was just me affected but now we have families. Make sure that you’re resume is current and you’re utilizing Linked In as a professional asset. Keep things up to date there, ask for recommendations and endorsements. And keep your social media clean.
Pay off high-interest debt or refinance.
The purpose is to lower the amount of money you are paying out. High-interest debt is something that can really hit your pockets during a recession. Get this under control while the economy is still considered healthy.
If you’re like me, sometimes tuning in to the news channels and outlets daily can really be daunting. Don’t OVER-educate yourself but do the research, process the information, make the plan and then work the plan. Yes, just that simple. Don’t inundate yourself with information that will freak you out and trigger your anxiety. Keep it simple and as complex as you need.
The Crunchy Mommy’s Do’s & Don’t’s for Making Your Life Recession-Proof
When you hear “live within your means” the first thing that comes to mind is to stop spending money period, amiright? But that’s not what I’m saying here. While it’s important to not just blow $200 on fabric you have no immediate need for, it is still important to have SOME fun.
- Do continue to treat yourself and invest in your self-care. But set a budget,
putsaid budget on a pre-paid card and stick to the budget.
- Do have family-focused time. Use this time to nurture the relationships with others and becoming closer.
- Do get creative with enjoying life. This may be changing your measures of success or finally taking time to become the Pinterest mom!
- Do educate yourself on what a recession means for you and your family. Make the changes that will work for you guys–there is no cookie-cutter approach.
- Don’t live in fear.
- Don’t let the potential lack of finances destroy your relationships. Money will always come and go but your relationships are invaluable.
- Don’t try and keep up with the Jones’. You don’t know what their money looks like so do what’s best for you.
- Don’t forget to have fun and live.
My Financial Resources:
So on a scale of 1-10, how recession-proof is your life?