Recession’s come and go and it is not a matter of if there will be another recession it is a matter of when.
Here is a handy guide by Valencia Higuera which would help you combat the recession:
A recession is like a rainstorm: You can take steps to limit its impact once the rain starts pouring down, but the best way to withstand a storm is to fix your roof before the storm starts.
Track your expenditure
Just because things are going well and there always seems to be money left over at the end of the month no matter how much you spend. Then you need to start tracking your spending.
If you start tracking your spending today, you’ll at least know where your money is going. If you don’t like tracking your own spending, it’s getting even easier to let an app track your budget for you.
Minimise your debt whenever possible
Having a great job that pays you a nice salary and bonus, it might seem affordable to take three vacations a year. However, it is far more advisable to try and cut back on your spending, for example, reduce that number to two vacations this will mean you don’t have to cut back as much when a recession hits.
Maximise your value to your employer
During the Great Recession, unemployment peaked at 10 percent in October 2009, according to the Bureau of Labor Statistics. As high as that sounds, that means the nine in 10 people still were employed.
To increase your chances of surviving the recession without losing your job, try and find ways to increase your value to your employer. Take the initiative improve your communication skills, take on new tasks to increase your versatility as an employee. That way, if your employer has to make cuts during a recession he wouldn’t consider you.
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Build an emergency fund
You should have savings you are building before the recession in order to access to cash in the event you need help making ends meet.
This emergency fund is money you put set aside for miscellaneous. Whether you take a salary cut or you have to transition between jobs.
“A cash reserve should be six to nine months of living expenses,” said Megan Gorman, founder and managing partner of Chequers Financial Management in San Francisco. “So, it isn’t a small sum. But in the event there is a recession, it can give both peace of mind — and opportunity.”
Prepare With an Emergency Budget
It is a good idea to have a budget of how you manage your spending but before a recession you should have a recession budget.
An emergency budget is a plan for how you would spend your money if your financial circumstances took a nosedive, such as having to take a pay cut or losing your job.
“Plan ahead by having an emergency budget with expenses 20 to 30 percent less than [your] normal budget,” said Owen Winkelmolen, financial planner and founder of Plan Easy, a financial planning platform. When you have your emergency budget set up, you already know that you can survive financially in the event you need to cut back.
Consider a Career Change
No one can ever tell who will suffer a recession, some companies and industries are more prone to layoffs than others.
“Though we know that recessions are coming, there is no crystal ball,” said Stern. “Many companies resort to layoffs during recessions to attempt to keep business afloat. There are areas of the economy that continue to do well during a recession: healthcare, education and government.
Rebalance Your Portfolio to Reflect Your Risk Tolerance
Think about the risk levels of your money where they are for example if you’re close to retirement and 90 percent of your portfolio is in stocks, consider reallocating a portion of your investments to fixed income because you don’t want to have to be forced to cash out at a lower level.
If the market crashes before you can rebalance, try to wait out the recession, if possible, said Stern. Or seek advice
Exercise Caution Before Borrowing
Before you take out any loan make sure you can really afford to pay it back said Shipp.
“If you’re borrowing for an opportunity (buying a cheap asset), then you want to fully understand the asset you are buying and have a high degree of comfort and certainty that the opportunity will pay off he said.
Don’t Give Up on Your Investment Strategy
“The old adage is buy low, sell high,” said Gorman. “Seems obvious but most people do the opposite. So instead of looking at a recession as a negative situation, look at it as a chance to take advantage of a recalibration of valuations. If you have a solid, long-term strategy in place, a recession isn’t the time to change horses.
Jump From Renting to Buying
Real estate prices fall significantly during a recession, which means it is a great chance for people to own a home. According to the Bureau of Labor Statistics, about a decade of housing price growth was wiped out between 2005 and 2008.
“A recession can be an opportune time to make large purchases if you have good credit and cash flow,” said Stern. “Forward thinkers will actually wait for recessions to make these large purchases. Why buy something at full price when you can get it on sale? Strong borrowers actually have much more latitude to negotiate rates and points on house purchases during recessions when liquidity dries up.”
Start a Side Hustle
Even if you are making ends meet consider getting a job on the side to add to your income. It can be anything from tutoring students, teach a musical instrument or start your own consulting business with the skills you learn at your day job.
Not only can a side hustle provide extra money, but also if you lose your main job, you have a separate income stream to keep yourself going.
Cut Your Unnecessary Expenses
cut your expenses.
“You need to break your living expenses into two categories: necessary living expenses and luxury expenses,” said Gorman. “The necessary ones often can’t get cut — groceries, electricity and so on. But the luxury ones vacations, dinners out — you need to review and see if they are necessary.”
![Slide 6 of 16: <p>If you already have a budget in place that you use to manage your spending today, that's a great first step. Before a recession hits, take your planning up a notch by <a href="https://www.gobankingrates.com/making-money/tony-robbins-need-recession-plan-now/">preparing an emergency budget</a> before you even need it.</p><p>An emergency budget is a plan for how you would spend your money if your financial circumstances took a nosedive, such as having to take a pay cut or losing your job.</p><p>"Plan ahead by having an emergency budget with expenses 20 to 30 percent less than [your] normal budget," said Owen Winkelmolen, financial planner and founder of Plan Easy, a financial planning platform. When you have your emergency budget set up, you already know that you can survive financially in the event you need to cut back.</p>](https://img-s-msn-com.akamaized.net/tenant/amp/entityid/BBIIlhZ.img?h=373&w=624&m=6&q=60&o=f&l=f "If you already have a budget in place that you use to manage your spending today, that's a great fir... - JGI / Jamie Grill / Getty Images")
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