We live in interesting times. History.com notes that there have been three major recessions since the new millennium began, each one arguably more devastating than the last. With the way the wind is blowing, there may be another big one on the way (in 2023). Good planning and preparation are the keys to riding the next wave out in one piece. And, who knows, you may even be able to turn the tide in your favor and come out in a stronger position than before. 

CloudSwipe explains how you and your family can survive – and potentially thrive – during a recession. 

Make adjustments to your long-term financial plans 

You may have a long-term financial plan, which may involve investments, cash flow management, debt, budgeting, and retirement planning. A recession may throw a spanner in the works, and may interrupt or push back some of your goals. You must get a good grasp of your financial situation, see how it may be affected by variances (such as losses and emergencies), and make adjustments to shore up your weaknesses. Some suggestions: 

• Double-check your investments and adjust your portfolio when necessary. 
• Consider paying taxes on retirement money now and moving funds to Roth IRA. 
• Create an emergency fund (3-6 months of living expenses)
• Figure out alternate avenues of employment (job losses go hand in hand with recessions) 

Consider refinancing your home

Refinancing your home can be a good idea during times of economic recession. By switching to a lower-interest-rate mortgage, you can reduce the overall cost of your monthly payments and put more money back in your pocket. And even if the refinancing doesn’t save you money in the long run, it can still be beneficial by giving you some extra financial breathing room if you are struggling to get by on a tight budget. Keep in mind that refinancing makes the most financial sense if you plan to reside in your home long-term. 

Budget and remain debt-free 

Budgeting – or re-budgeting, if applicable – can save you from financial dire straits. You should have a big-picture view of your income and expenses. The goal is to minimize expenses and save as much as possible. CNBC offers a simple budgeting guide. Some suggestions are negotiating monthly bills, visiting second-hand stores for essentials, and purchasing groceries from cheaper places. If you carry debt, especially fixed-rate or variable-interest credit cards, you may need to set aside some extra funds to meet your obligations during the recession. 

Return to School to Advance Your Career

If going back to school to wrap up your education has been a goal for a while, now may be the ideal time to do so. Many people choose to pursue a college-level degree. For example, with a bachelor’s degree in business, you can learn skills in accounting, business, communications, or management. What’s more, online degree programs make it easy to work full-time and keep up with your studies. When looking at the options, be sure to choose a accredited and reputable school. 

Get insured to safeguard against worst-case scenarios 

Having insurance during a recession – whether it’s business, auto, life, or home – can be a lifesaver. For instance, business insurance can offer cash for legal settlements arising from customer disputes if you’re short. And with life insurance, you can rest assured knowing your loved ones are taken care of if the worst were to come to pass. You can purchase homeowner’s insurance to protect against structural damage. 

Spend money wisely and intentionally when making purchases

It may be a good idea to postpone expensive purchases until after the recession. If you must make a purchase, it’s a good idea to follow the “only buy it if you can afford two” philosophy. To get the most out of your money, it helps if you read product reviews and check ratings before committing to a purchase. This ensures you buy the products that will last longer and so be worth the expense. An example of this is conscious spending when purchasing pet items – sites like Pets Digest offer reviews to ensure you’re purchasing high-quality products. 

Starting a business during a recession is paradoxically a smart move  

It’s not all about saving money – you should also look to make as much as you can. Starting your own business can pay off big time during a recession. Interest rates are low, infrastructure is cheap, leases easy to secure, employees are easy to hire, and government assistance is readily available. Also, demand tends to pick up by the time you’re finding your feet. Some of the biggest companies in the world started during a recession.

Not all business ideas are viable during a recession – spend time and energy brainstorming something profitable. Some potential downturn-proof business suggestions are repair services, childcare, and online freelancing. Repair services are hands-on, pay well, and are always in demand. Childcare can be enjoyable if you love working with children – and it doesn’t require much in terms of investment or upkeep. Last, online freelancing is perfect if you want to work from home or travel as you work.

Conclusion

Recessions are, unfortunately, a regular occurrence. While they can be testing, it’s important to remember they’re temporary and better times will come. Stay positive, and do your best to ride them out. Take advantage of insurance and refinancing, consider going back to school, and don’t hesitate to take the bull by the horns by starting your own recession-proof business. 

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