Given the existing political and economic climate, a recession could be in the very near future, and if it occurs, there’s very little that anyone can do to change it.
A recession is known to create challenges for companies to survive, but it’s equally challenging for the common person. The devastation of a recession can last months and linger for years.
If the pandemic taught us anything, it’s that it’s always best to prepare for what you can control.
Spooked by talk of a recession? Instead of letting the world’s happenings control your finances, focus on learning recession-proof skills that will fortify your finances against an economic downturn.
Being able to get in an emotionally clear headspace will come in handy in a recession.
When in panic mode, our brains are unable to make smart, long-term decisions. Most people rush to sell their investments when there’s a drop in the market.
Investments should make you feel financially secure, not give you sleepless nights. Calming routines will help you be prepared to face the unknown.
It can also help to recognize that a recession is inevitable and it shall pass. The economy has seasons, and a recession is like winter. In the long run, you’ll get plenty of opportunities to sell at a higher price.
Such wisdom may not exactly cheer you up, but there’s some consolation in knowing that a recession isn’t the end of the world.
Budgeting is a skill that can help you at any time, but more during a recession.
Budgeting can be an exceedingly dull task, but budgets are meant to provide us with necessary guardrails. To reach your financial goals, you need to put structures in place to help you see things to completion.
When you learn the skill of budgeting, you will know how much money you spend each month and cut any unnecessary expenses like unused subscriptions and morning lattes.
You can then transfer the remaining balance toward reducing your debt or increasing your savings.
Gone are the days when you had to rely on your salary alone to thrive.
When you learn the art of side hustling, you can pad your wallet and have something to fall back on when you’re laid off from your 9-5. In a recession, jobs become fewer and mass layoffs are rife.
Any skill or talent can be easily monetized. You can give out music classes if you’re a good piano player or start a dog-sitting business if you’re good with pets. You can also do consultancy work on the sideline of your current job.
As you ramp up your clientele, leverage social media to gauge the interests of your target market. Word of mouth recommendations and referrals can help you advertise your products or services.
Side hustles are scalable and you can turn your passion into a full-fledged business.
Portfolio Diversification and Rebalancing
Diversifying your portfolio with uncorrelated investment pairs can help you ride out any unforeseen dips in the market and get good returns.
Learn the skill of making any necessary tweaks to ensure you’re still comfortable with what’s available.
Your portfolio before and during a recession should be different.
Aim at having at least 40 percent of your money in cash equivalents like Certificates of Deposit (CDs) money markets or short-term and immediate-term bonds.
Investing in Yourself
As mentioned, recessions cost jobs.
During an economic downturn, many sectors are negatively impacted.The job market gets more competitive as the economy gets sluggish.
Even if you have a great job, it’s vital to work on learning new tools, trends, and technology to build up your resume. Shy public speaker? Bad with numbers? Poor at interviewing? You know what you’re missing. Be bold. Face those fears. Sharpen those skills. Take a class.
By investing in your value as an employee and honing all of your current work skills, you’ll have a better chance of keeping your job or getting a better-paying one.
Also, pick up a few skills in other departments at your job. Your employer may be downsizing, but doing this will prove that you’re valuable in other areas.
Your career isn’t a hero’s journey, especially during a recession.
Learn to always make new connections and nurture the ones that you have.
By keeping your online profile and presence up-to-date, others will know who you are and how you compare with workers with similar backgrounds.
Networking goes beyond online presence. To broaden your network, work on making yourself visible through participating in panel discussions, leading workshops, and joining associations.
Sunny days inevitably lead to rainy ones.
The only thing you can really do amid worries of a recession is to prepare for it, which means mastering the above recession-proof skills — the sooner, the better.