5 Financial Tips To Survive a Recession
The threat of a recession is looming, if not very much upon us. The weak dollar, trade deficit, sub-prime lending nightmare, and poor performance from some of America’s largest banks all lead to us checking our accounts hourly, palms sweating and brow furrowed. But have no fear, there are some things you can do during this volatile time to not only protect yourself, but also possibly make a few bucks. Sound good? Then read on!
1) First, it’s vital that you not panic. DO NOT PANIC! At this point, if you are heavy into stocks, you have already felt much of the fury of the times. You’ve lost big, seen a big correction, lost big again…what a week! Do not empty your accounts! Do not stop your 401k deposits! Remember, you and I aren’t smart enough to know when the low is the real bottom, or when the high is the best it’s going to get. So, my first nugget of advice is to sit tight.
2) Start building a solid cash reserve. If this is a real recession, there is a risk of layoffs. Assuming you are 100% secure in your job is foolhardy at best. You rely on your employer for the majority of your income, but don’t hedge your future against a constant flow of paychecks. Try to build cash reserves that can keep you afloat for 6 months. And start doing it years ago! Or today, if you aren’t a time traveler.
3) Buy Stocks! This sounds insane, but the entire premise of stock trading is buy low, sell high. When the market is down, your 401k contribution goes a lot further. Keep it going!
4) Gold. Gold has been doing very well recently. You can buy “into” gold via several services, or you can buy actual gold an keep it in your home. If you want to start stockpiling gold at the house, go to a coin dealer and pick up some American Eagles. This is the ultimate in protection; if the dollar goes so far south that there are lines for bread, you still have something of international value to barter with.
5) If you have debt, move to resolve it quickly. Unless your debt is “good” debt - this would be a mortgage with a good fixed rate, or a college loan with good terms. Otherwise, debt is bad. You should remember that a percentage you owe every month is fighting against and percentages you make…the idea is to keep your debt to income ratio at the smallest possible level.
Hopefully, this advice will be of some help to you. I know it can seem scary sometimes when you are planning for your future. But you have taken the first step - plan! Without a plan, recession or not, you won’t get very far.
The author is not a financial adviser and is merely expressing his own opinions. Any decisions you make about your money are your own, as is the risk. We try to give good advice, but we are not liable for you taking it (or failing to take it!).
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