5 Steps You Should Take to Prepare for the 2023 Recession
Everywhere you look, you hear about the upcoming 2023 recession. However, have you made preparations to ride it out? With these 5 steps can help prepare and protect you for a possible recession.
The 2023 Recession is coming…
If you listen to the news, you will hear about how a recession will hit in 2023. Everywhere you look in social media you see the classic stock market crash graph, with flames, and someone with a scared expression.
You may wonder what a recession is? A recession occurs when the economy has a decline over a period of months or years, which affects the value of the Gross Domestic Product (GDP). There is also an increase in prices, inflation, and unemployment rates.
Bloomberg Economist is predicting that we will enter a recession by the second half of 2023. Although this is a prediction, you should still take steps to protect yourself…just in case.
Audit Your Finances
The first step you need to take is to audit your finances. You want to go through your bank statements, credit cards, or other accounts you have in the recent months.
Review your typical monthly income and expenses and create a list of ALL these expenses (bills, debt, living expenses, ect.). Remember to include all those pesky subscriptions we all have these days; they really do add up! You can use my free generic budget in order to help you organize them. Other things you want to look at are small items (Starbucks, vending machine purchases) that find you spend money on. Finally, if you have pets, include their expenses (food, toys, and medications).
Cut Back What You Can
The next step is the “not so fun” part. Nobody likes to cut back on spending. Of course, I do not endorse the toxic culture of “extreme frugal life”; however, in a recession costs go up and you may have less hours at work or worse, lose your job entirely.
Therefore, you need to take control of your extra spending habits. Go through your list and identify anything that you can make adjustments to reduce costs. For example, is the electric too high? Is there a way you can reduce usage? Sometimes even the addition of thick curtains or fixing drafts can make a huge difference.
Similarly, you can reduce subscriptions, reduce the frequency of recreational habits (shopping, eating out, etc.), or find better deals on food, clothing, etc.
Savings or Liquidate
What does your savings look like? Now that you have figured out what you can cut back on, the extra cash can be put towards an emergency fund.
The budget or list that you create can help determine how much you need (per month) to pay for your expenses. Next, you can use that number to calculate how big of an emergency fund you need in order to cover about 6 months or a year worth of expenses. The goal is to get as close to that figure as possible. But anything is better than nothing!
Similarly, do you have any assets or own anything that you can liquidate to cash? For example, luxury bags or shoes that are collect dust in the closet, unused items like these can be turned into quick and easy cash.
Build Up Your Skills
Another thing that can help you survive a recession is to build up your skill set. One thing I always say, is that if I lose everything today, it would not take me long to get myself back to where I was. Why can I say this with such confidence? Well I have invested time to learn a variety of skills in the event I do loose out on my primary source of income.
Likewise, take the time to build up several skills that can be used in many different fields. Office skills, craft skills, editing and so many more are some that are used at many jobs.
Finally, skills can be used to reduce your cost of living. Skills like gardening, couponing, or just DIY skill, can make a huge impact.
Multiple Sources of Income
Side hustle culture can also be toxic, but the reality is, that extra sources of income can save you in a pinch. During a recession, the economy slows down and incomes suffer. Multiple sources of income can help cushion the blow.
Additionally, this is where extra skills come in handy. The skills can be used to create a side hustle and create an extra stream of income. Anything can become a way to create income!
Whether or not the 2023 recession happens, following these 5 steps are a great way to gain financial stability and put you on the road to financial freedom.
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