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10 Ways To Make Yourself Recession-Proof

April 17, 2021 4:52 pm0 commentsViews: 411

recessionproofThe recession has made just about everyone think very carefully about their financial positions and how they can ensure they never fall into the pitfalls that dragged so many people down only a few years ago. Whether you were one of the individuals that struggled so much during the recession, or whether you didn’t feel it as much, there are ways to ensure that you are recession-proof, just in case the world finds itself in a similar position again.

1. Start Saving

Many people don’t even think about saving money until they start to think about retirement, because they assume they simply won’t need to. The recession showed that regardless of how well a person is doing at their job, or how much money they are making at the moment, it is still possible to lose everything in a short space of time. To combat against the worst of a recession, individuals need to spend less and save more. The professionals believe that individuals should be saving about 6% of their income at least, although it would be better if 10% was put away for the future. Those who are struggling to accomplish this might want to consider altering their spending habits so that they can get closer to this goal.

2. Diversify

Putting all the eggs into one proverbial basket means that professionals could risk losing everything in the event that something goes wrong. Diversifying, according to the professionals, ensures that people have the chance to make up for what they lost in one investment with another. In order to determine whether a person needs to diversify, it is important that they take a good look at their investment portfolio to see whether it needs to be balanced.

3. Hedge Against Poor Economic Situations

Hedging against poor economic situations is another way for a person to make themselves recession proof, and it is also something that many people chose to do after the last economic disaster. Before individuals take this route, they will want to make sure that they consider their risk toleration and their overall economic stability. Gold, for example, is considered by many to be a sound hedge against a recession, although this isn’t a market that appeals to everyone.

4. Have Access To Liquid Funds

Individuals need to make sure that they have access to a small amount of liquid funds, just in case they need to access this cash in a hurry. Many individuals prefer to keep all of their money in investments, although in instances where they need to get to it quickly, they won’t be able to. Having a small amount of money in a savings account will ensure that individuals can withdraw what they need until their investments become available to them.

5. Diversify Revenue Streams

While many individuals choose to diversify their investments, not all make the decision to diversify their revenue, and this could be problematic further down the line. Diversifying revenue means that when individuals find some sources drying up, they will still have access to others, and this could end up making all of the difference. This sort of preventative measure isn’t only appealing in those instances where individuals are preparing for a recession; it can help even if they find one source of income struggling for just about any reason.

6. Consider Debt Carefully

A few years ago, people often didn’t think twice about getting themselves into debt, and this quickly led to individuals borrowing much more than they could afford to repay. These days, it is recommended that individuals consider their options very carefully before getting themselves into any debt, because this will not only benefit them at the present time, but also in the future.

7. Live Within Your Means

After the recession, many people realized they didn’t require huge homes, lavish vehicles and a range of other outlandish goods that cost a fortune and would end up sinking them in the event of another recession. Many people opted to downsize to smaller homes, more modest vehicles and more affordable lifestyles overall, and this is a solid protection plan against recession because it cuts down on unnecessary costs.

8. Prepare For an Emergency

Preparing for another recession is one of the best ways for anyone to ensure that they are recession proof. Some people go so far as to store food, not just finances, for a period when they might be up against the collapse of the economy, although this is up to each individuals to make up their minds about how they want to go about preparing.

9. Backup Plans

A backup plan can really come in handy because it allows individuals to prepare for a time when they might find themselves jobless, or no longer relevant within their profession. Those who are looking to prepare against this will want to learn new skills that are marketable in a recession climate so that they never have to worry about what they will do in the event that the worst should happen.

10. Be Realistic

While no one knows when a recession is going to hit, individuals need to keep in mind that this is just about always a possibility, so it is important to be realistic about these prospects in the hopes of preparing for them. Some people might spend their lives preparing for a recession that simply never arrives, while others might find that their hard work pays off within only a couple of years. Individuals who want to make sure that they are prepared should have the mindset that they are preparing for the inevitable, since this will force them to take every financial decision into consideration as they go about preparing for the collapse of the economy.

Very few people will be completely immune from the effects of a recession, although those who choose to prepare for it will find that they have a better chance of prospering during these difficult economic times, and this could end up making all of the difference.