I’m sure you all have heard the news of a recession approaching. And why wouldn’t there be? Interest rates are rising, and inflation is at its highest yearly increase since 1981. With wages not being able to keep up with rising prices on just about everything, consumers are pulling back, increasing our probability of a recession.
While packing up the SUV and heading for the hills may seem like the answer, it isn’t always the viable option. Recessions happen but, with a little preparation and good behavior, you can be ready for them. Here are a few tips to help you prepare for a recession.
Some businesses and industries are impacted by recessions, while others thrive during these times, due to the nature of their services or the options they provide to consumers. Take a look at the industry you work in – If you are in a field that could be affected by the recession, it would be a good idea to research your options, update your resume, and prepare for any departmental or personnel changes.
Depending on the impact of a recession, businesses may need to look into operational improvements and ways to cut labor costs, whether that be hour reductions, furloughs, or layoffs. If there is a possibly that your company will need to cut labor costs, make sure you are in the boat of higher performers because they are least likely to get cut.
Our Pro Tip for Business Owners: Layoffs are difficult and can hurt morale, but they are not the only way to cut labor costs. Look at your compensation model to see if adjustments can be made and take into consideration unpaid time off or hour reductions when trying to cut costs.
If you are a business owner, look at your vendors and try to develop closer relationships with key contacts. Everyone is looking to cut costs during these tough times, and the better your relationships are with your suppliers, the easier it will be to negotiate and land on the best deals.
If you have been thinking about splurging on something special and treating yourself, you may want to hold off until things stabilize a bit.
I know you really want that new PS5, but say it with me…We (we). Don’t (don’t). Need (need). It (it). We don’t need it (I wanna get it).
There are ways to reduce your monthly overhead without having to make huge sacrifices. Maybe you are paying for three different streaming services that have overlap and can be consolidated into one service for the time being. Switching cable, Wi-Fi, or cell phone providers can also come with great deals for new customers. Whatever it may be, there are usually ways to reduce costs and save money.
Last, but certainly one of the most important tips, start building up your savings/emergency funds. It’s best to put aside a minimum of 3-6 months’ worth of basic living expenses in the unfortunate event that you need to use it.
It’s never too late to save and if you have the means to do so, aim to boost your emergency savings to 12 months of your essential expenses. Recessions can be unpredictable and having an emergency fund can save you a lot of stress while figuring out your next move.
One thing to remember is that recessions are part of the natural economic cycle, and we hope these tips help give you a little insight on how to prepare for one.
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