The threat of a looming recession or the potential for a financial crisis is stressful. It is easy to get lost in all the worries of what has happened, what may happen, or what’s still to come.
Luckily, you do have a choice. Rather than worrying about all of the what-ifs, you can choose to focus on today and the steps you can take to help you in the coming weeks!
Forget about the past events; it’s time to focus on your response. The quicker you do, the better off your sense of financial wellbeing and your financial position will be once it’s over. Take the following steps at the first sign that things may be headed south!
In a down economy, cash becomes king. It is absolutely necessary to hold on to all the cash you can. This is a great time to review your assets. Take note of your liquid accounts and how much you have in your emergency fund. It is a good idea to calculate the number of months of reserves you have available to live on if need be.
During the Great Recession, many banks reduced or even canceled lines of credit. Don’t rely on banks. They are going to be doing their best to control their own losses. Have access to your cash. In doing so, you’ll have greater peace of mind over the upcoming months.
Usually, once a financial crisis starts to turn around and recover, buying opportunities present themselves. Often, you can pick up both traditional and alternative assets at BIG discounts. By conserving cash, you’ll have money available to take advantage of the coming opportunities which can catapult your net worth!
Depending on the depth of the crisis, your income may be significantly affected. The second money step to take is to analyze your current income and know your position. Have a plan on what to do if your income gets reduced. For most, this means filing for unemployment. It doesn’t hurt to familiarize yourself with this process now, just in case you need to use it.
If you are worried about your job, then it is time to update your resume. This puts you one step ahead of the game if you do find yourself unemployed. It is also wise to browse other job opportunities you may be interested in. Websites like Indeed.com and Careerbuilder make this easy. The key is to be prepared and have a plan in case you need to act.
In a widespread financial crisis, sometimes the government will have special programs available. Occasionally, these include extending unemployment or even stimulus money. However, don’t rely on these programs. There are always special terms and conditions you have to meet in order to qualify. If you do qualify, great; treat this extra money as a boost to your reserve account.
On a personal finance site, this is a no brainer, right? Absolutely! This is something you should always be trying to do, even if you aren’t in the middle of a crisis. Never pay more for goods and services than you have to. This is the perfect time to start shopping around for different providers to see which bills you can lower. Generally, these companies are even more willing to work with you in times of need.
Oftentimes during a financial crisis, interest rates drop. This could make it a great time to refinance your home or auto loan, saving you hundreds each month. Take a quick look at interest rates on Bankrate.com and see how your rates compare to what other lenders are currently offering.
Are you paying for services you don’t use? Many people have gym memberships or magazine subscriptions they don’t utilize. Cancel them. Quit spending and wasting money on things you don’t use!
Look ahead over the next 12 months to see what additional expenses you may face and start preparing now. Get ahead of these bills and use reserve funds to start saving for them. If you have big purchases planned or home renovations scheduled, put these projects on hold. Now is the time to prepare for the uncertainty that lies ahead.
“Life is what happens to you while we are busy making other plans.” – John Lennon
Your goals are important and give you something to strive for and work towards. During difficult times, they could even be a welcome distraction from the events at hand. I encourage you to stick with your goals and think back to your ‘why’ for pursuing the goal in the first place.
Even though it pains me to say it, there are certain times you may need to consider modifying or delaying your goals. The point of this article is to help get you through a financial crisis, and sometimes that requires taking drastic measures. Unfortunately, these things happen and are a part of life.
Still, if need be, there is probably a way to adjust your goal. For example, consider reducing the amount of money you’re saving each month or pushing back your time frame to complete a goal. Don’t abandon them; keep pushing forward towards your financial dreams in one way or another.
Crises are uncertain times. They can be scary, but they also provide opportunities. The opportunity to act, push worries aside, and overcome new challenges!
How are you preparing for the next recession or financial crisis? Comment below.
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