The Federal Reserve is getting ready to meet again and odds are they are going to raise interest rates………again.
Many experts believe that we are headed for a recession within the next year.
So what should you do now to make sure that a recession doesn’t wreck your finances?
Step 1: Take a look at your expenses
Inflation has been crazy. Most if not all your expenses have likely increased significantly over the last year and your cash after paying all your expenses has decreased.
Now is a good time to see what has increased, what expenses are unnecessary (I’m looking at you, Peacock Network), and which ones can be lowered by changing a provider or cutting back.
Step 2: Check your emergency fund
You may have had 3-6 months cash in your emergency fund a year ago, but do you now? How have rising costs impacted your ability to cover 3-6 months’ of living expenses if you lose your job? What would happen if you were suddenly down an income?
Now might be a good time to take on some extra shifts or even get a side hustle to beef up those cash reserves.
Step 3: Take a realistic look at your employment
Are you crushing it at your job? How well is your company doing? Do you work in an industry that usually has cutbacks during an economic slowdown? Or is your industry mostly recession-proof?
If your job could be at risk, it is time to prepare. Get your resume updated. Start taking a look at what is available in your field. You don’t want to be starting from scratch if you lose your job.
Step 4: Brush off the dust of your “OH $hit!” Budget
Your Oh $hit Budget is the pre-determined, pre-negotiated budget you keep behind glass that says “Break Here In Case of Emergency”. This is the one you go to when you need to make immediate changes to conserve cash. The great thing about having this budget ready is that you can figure it out ahead of time, with your partner, before the stress of the emergency is there.
By taking the 4 steps above, you will be in the best position to weather an economic downturn. If we don’t have a recession you will have more cash to put toward your financial goals!