According to a recent survey, nearly half of Americans believe that the country is already in a recession. While the official definition of a recession is two consecutive quarters of negative economic growth, many Americans are feeling the effects of the economic downturn caused by the COVID-19 pandemic.
If a recession is indeed on the horizon, it's important to take steps to prepare. Here are a few things you can do to protect yourself financially:
- Build up an emergency fund: Having a savings cushion can help you weather unexpected expenses and lost income during a recession. Aim to save at least three to six months' worth of living expenses.
- Reduce debt: High levels of debt can make it difficult to make ends meet during a recession. Consider paying down credit card debt and other high-interest loans.
- Be mindful of spending: A recession can be a good time to reevaluate your budget and cut back on unnecessary expenses. Be mindful of your spending habits and look for ways to save money.
- Look for ways to increase income: A recession can be a good time to explore new income streams. Consider taking on a side job or starting a small business to help supplement your income.
- Be prepared for changes in the job market: During a recession, many companies may cut back on hiring or even lay off employees. Be prepared for this possibility by updating your resume, networking, and keeping an eye out for job opportunities.
- Keep a diversified investment portfolio. If you are invested in the stock market, it's important to diversify your portfolio, so that you are not overly exposed to any one sector or stock. This will help you to minimize risk and weather market volatility.
Recessions can be difficult, but by taking steps to prepare, you can protect yourself financially and come out stronger on the other side. Remember that it's always better to be safe than sorry, so start taking action now to prepare for a potential recession.