What’s going on with the economy? Even a crystal ball may not have the answer.
While the economy has more or less ticked upward since the Great Recession ended in 2009, the expansion can’t go on forever.
“That’s the way our economy works,” says Money Talks News founder Stacy Johnson. “The question isn’t if we’re going to have another recession, it’s when.”
Are you ready today to withstand the fallout from a crashing economy? Here are nine capital ideas to help you survive the next recession:
1. Beef up your bank account
If you’re feeling a little flush, it is a great time to start socking away some cash. Check your savings balances. Could you live off your savings for six months, if not a year?
If not, use some expert tips to get started saving. A great place to start is by reading our stories “Save More Money This Year Using 5 Fun Tricks” and “9 Ways to Build an Emergency Fund When Money’s Tight.”
2. Lower your dependency rate
How much of your regular income goes out as fast as it comes in?
Carmel, Indiana-based financial adviser Peter Dunn — known as “Pete the Planner” — urges you to reduce what he calls your “dependency rate.”
Dunn says that if you spend 95% of your income on a regular basis, your dependency rate is 95%, meaning that 95 cents of every dollar coming into your house is vitally important to your solvency — or so you think.
In his column in the Indianapolis Star, Dunn writes:
Your goal is to decrease your rate over time, even in the face of pay increases. Your diligence toward this issue will not only recession-proof your household, but it will also make retirement much easier. … Do the hard work now, and the stress that comes with a recession might never show up.
3. Update your resume
No job is recession-proof. Always be ready to seek new employment.
Keep your resume up to date even if you’re not job hunting now. You never know when you’ll need to send one out quickly. If you keep the resume current, you’ll be able to customize it for whatever position you seek.
Be sure to highlight concisely your achievements, job titles and a summary of your skills. Be truthful and don’t ramble. Proofread your resume so it’s error-free.
For more pointers, check out “12 Tips to Building a Resume That Gets You Hired.”
4. Network now
Don’t wait until you’re desperate to network. Businesspeople might sense that you only come around when you want something.
“Networking right will constantly reward you with ideas, information and opportunities,” success strategist Carlota Zimmerman tells Money Talks News.
Look for groups or events that align with your goals. Check alumni gatherings, industry meetings or even your house of worship, she said.
“You want to put yourself in front of members of your industry who are — at least theoretically — several rungs above you on the corporate ladder, since these are the people who, if impressed, can help you advance your own career goals,” Zimmerman says.
Know what you’re going to say when you’re networking. Prepare and rehearse your “elevator pitch.” Deliver a concise and vivid account of who you are, your experience, what you’re looking for and how you could help your next employer. The talk should be good enough that it can be delivered during a 15- to 30-second elevator ride.
Having trouble getting started? Read “9 Simple Tips for Successful Networking.”
5. Get a side job
The so-called gig economy makes it easier than ever to make money on the side. Whether it’s setting yourself up as an Uber driver, starting a dog-sitting service or selling goods online, you can find ways to generate extra income.
You can sock away the money you earn, invest it or pay down debt.
Money Talks News has done numerous stories on this topic, including:
- “19 Unusual Ways to Earn Extra Cash“
- “How to Make Extra Money Renting Out Your Car“
- “How to Make Extra Money Pet Sitting or Dog Walking“
6. Pay down debt
Keeping your debt low and your credit score high will make you more secure and better able to pounce when opportunity knocks, Stacy says.
Paying off debt now can also save you hundreds of dollars in interest payments later — and help improve your credit score.
A high credit score can save you money if you do need to borrow. As Stacy once wrote:
“Borrow $250,000 with a 30-year, 4 percent fixed-rate mortgage, and over the life of the loan you’ll pay $179,674 in interest. But increase the rate to 6 percent, and you’ll pay $289,595. That’s a difference of nearly $110,000 — enough to help you retire earlier, start a business or put your kids through college. In short, those measly 2 percentage points could change your life.”
7. Track your spending
It’s easier to reach financial goals if you know where your money is really going.
With free money-tracking programs, you can view all your accounts in one place — checking, savings, retirement and more. Some also enable you to create budgets. YouNeedABudget is one option for such tracking.
8. Check your portfolio
When was the last time you adjusted your 401(k) or IRA investments? Do you have too much money in stocks, especially if you’re near retirement?
Too many people had too much invested in stocks before the last economic downturn, Stacy warns. Consequently, many lost a good chunk of their retirement savings when hard times hit and the markets took a dive.
There’s no excuse for that, considering that rebalancing your investment portfolio can be done in less than 15 minutes.
9. Don’t wait
By the time anyone declares we’re in a recession, it’s too late to prepare for one. That’s one reason it’s good to get ready now.
Before a recession becomes official, there are warning signs. More important than watching for signs, though, is simply getting started preparing for the next downturn. It is inevitable.
What are you doing to prepare for the next recession? Share with us in comments below or on our Facebook page.