Due to coronavirus pandemic, many people have been staying at home since a month to maintain social distancing and avoid the spread of the virus.
Therefore, most business that does not fall under essential categories are closed to avoid the coronavirus fallout.
However, this has led to a serious impact as the market seems to be in turmoil right now and most of the sectors like tourism and hospitality being adversely hit.
But, if this is not enough then there is more bad news for you as this might be just the tip of the iceberg.
So, what do we do in this scenario and how do we live through this period of recession where the market is badly hit and the money seems to be going down?
In this blog, I’ve tried to answer some of your questions and have put forward few ways that you can use to prepare for the future and secure ourselves.
Though the market condition looks very grim right now, its never too late to ensure that your financial state is well equipped to weather any storm. Here’re 5 ways that can help make recession-proof your finances.
1. Pay off your debts
With the coronavirus pandemic affecting our lives and our economy, it is very important that we pay down any unsettled debt like a credit card balance or any high-cost debt. This is specifically to bring some peace of mind and relief in our lives as the economic downturn can lead to a sudden job loss.
2. Boost savings in the emergency
I hope that you must’ve saved some portion of money for emergency and this might be the time to use that fund to pay off your debt. Though we’re on a pretty good shape during the coronavirus outbreak but we still need to keep us going if we’ve have to beat this virus. Moreover, the tough times are lying ahead and its not the time to relax as we need to continue saving for emergency. Therefore, the first task we need to do is to load up your emergency fund with atleast one month’s of worth of living expenses. Then, you need to pay off your debt and focus on building a cash reserve of atleast 3-6 months worth of funds.
3. Cut down on the expenses
While all the malls and theatres been closed and we’re stuck inside our home, it might be a good idea to analyze our monthly expenses. It’s time that we identify the items those are optional and can be avoided and identity those items that are necessary. Once you identify the optional items then it may be good to eliminate them now or in the future to save for the future. We also need to live within our means and this means we need to spend no more than 30 percent of our net income. Many experts believe that it might be a good idea to create a monthly budget for ourselves. This will help us to ensure that we live within our means and don’t overspend.
4. Increase your value
To make yourself recession-proof, one of the biggest investments you can make is to pursue an education and build upon your skills. Many companies today need workers with skills and training that may not have existed while you were in school or college. Hence, this might be the right time to enrol in a course or training to increase your value to your employer or even your competitor. You can also use this time as an opportunity to learn a new skill that you’ve always wanted but couldn’t due to work pressure and even apply explore a job change to a high-demand field while the economy is in good shape and there’s opportunity.
5. Build the portfolio based on your goals
With the coronavirus outbreak affecting the economy considerably, you’re bound to thinking seriously about your investments you’ve made. The thought of markets crashing might make you fearful that you’ve lost all your earnings after years of hard work. However, there’re few people who would sell their stocks or mutual funds expecting that the market will fall more. Sadly, this might be the worst thing to do as when the markets start to recover then you might miss out on the opportunities of market recovery. You need to continue to build the portfolio based on your goals and not based on the market condition. The markets will rise and then the person who had been patient enough will get the benefit of doubt. You need to definitely build the portfolio for the long term.
So, these are some of the ways that you can use to make yourself recession-proof.
What do you think? Do you have any other point in mind? Feel free to provide your views below in the comments.