It’s no secret that experts are predicting a recession in 2023. With this looming economic downturn on the horizon, it is important to take steps now to bulletproof your finances and ensure that you can weather any financial storms that may come your way. In this blog post, we will look at 6 ways to make sure you are prepared for the potential recession.
Table of Content:
Build an Emergency Fund
The first step to bulletproofing your finances is building an emergency fund. This should be money that is easily accessible if you need it in a pinch, but not so easy that you are tempted to dip into it for non-emergencies. Ideally, your emergency fund should cover 6-12 months of regular bills and expenses.
Trim Your Regular Outgoings
The next step is to look at all of your regular outgoings and see if there is anything unnecessary or excessive that can be trimmed down or cut out completely. Start by making a list of all the things you spend money on each month and then assess each one individually – could you switch providers and get a better deal? Could you reduce or cancel any subscriptions or services? Are there any areas where you could save money? Taking the time now to reassess your outgoings can help free up some extra cash each month, which will become invaluable during a recessionary period.
Rein In Major Expenses & Squeeze More Out Of Your Home
While cutting back on regular outgoings is important, don’t forget about larger expenses such as holidays, car purchases or home improvements. These costs can be significant during normal times – let alone during the leaner times of a recession! Try to delay major purchases if possible, or look for cost savings in other areas like switching energy suppliers or shopping around for cheaper insurance policies. You may also want to consider renting out part of your home or taking in lodgers who would pay rent; this could give you an extra source of income while also helping towards covering the costs of running your home more efficiently.
Upskill & Find Sources Of Passive Income Before The Recession Hits
You can also use this time before the recession hits to upskill yourself so that when it does hit, you have some additional qualifications which may help make finding new employment easier. Additionally, take some time now to research passive income sources such as stocks and shares investments; these types of investments often require less effort and attention than active ones (such as trading on the stock market), but can still provide financial gains over time which may prove useful during the leaner times of a recession.
Transfer Extra Income Into A Hard-To-Reach Savings Account
Once you have taken steps to trim down your monthly outgoings, consider transferring any extra income into a hard-to-reach savings account; this will allow you access should an emergency arise but will also make it harder for temptation (or necessity) to cause unnecessary spending sprees! It’s also worth factoring inflation into any long-term savings plans – inflation means what seems like enough right now may not be enough later down the line when prices rise due to economic pressures caused by the recession.
Finally – don’t panic! Although recessions are never fun, they do offer opportunities – many businesses actually find success during tough economic times as they learn how best to serve their customers with limited resources available (and sometimes even generate profits!) So keep calm and stay positive – with some planning ahead of time it is possible to weather any potential stormy financial waters ahead.
A looming recession doesn’t have to mean disaster for your finances if you take steps now to prepare yourself financially before it hits. By building an emergency fund, trimming down regular outgoings, looking for side hustles and sources of passive income and transferring extra income into hard-to-reach accounts – combined with staying calm and not panicking -you’ll be well placed ready for whatever comes next in 2023!