The speculations for a potential recession in 2023 are doing rounds on the internet. Instead of panicking and losing your mind, the practical solution is to act smart and pull up your socks for some action. You need to exert control over things where possible and mitigate the risks on aspects over which you have little or no control. The alarm bells are ringing calling the people to take steps to proof up their finances and increase their sources of income to generate more revenues.
There have been too many warnings made of a possible recession over the last few months. You need to review your salary, expenses, and the money in hand and think of ways to cope in case you get fired from your existing job. Any steps you take to save yourself from the dooming effects of the recession will only help improve your financial standing whether or not a wave of the recession makes its way into the world or not.
The main focus should be on making oneself an indispensable part of the job so the chances of getting sacked are kept to a minimum. Expansion of skillset and getting a side hustle can be valuable steps that you can opt for to make your financial life recession proofed. Clearing off loans, re-evaluating your monthly budget, cutting down expenses, investing your assets, saving rigorously, and doing part-time jobs are some of the many ways that can help you deal with a recession. Let’s look into the options in detail and see what practical solutions you can adhere to for saving your career and family from the possible side effects of an upcoming recession.
Personal Finance Tips to help you during Economic Uncertainty
Here are some important steps that you can take to prepare yourself and your family for a possible recession.
Start Budgeting and Build up an Emergency Fund for the Recession
No matter if the economy is on the rise or is feared to be coming to a halt, it’s always a wise idea to keep some money aside as a saving. This accumulated savings can help you clear off your utility bills and pay off monthly expenses in case of a sudden job loss or other financial adversity.
Starting off with budget planning for your monthly expenses would be a good move. Budgeting helps you in keeping a check on your monthly expenses so that you know where and how much your income is being spent. Re-evaluate your spending and figure out ways to cut down extra costs that aren’t very necessary. Cutting down on some very insignificant expenses such as newspaper subscriptions, paid gaming accounts, Netflix, Amazon memberships, and other leisure activities for which you have to pay per month whether you use them or not can help in saving money. The saved money can be used for setting up emergency funds for life adversities and economic uncertainties.
You can set a goal to set aside some money each month for an emergency fund that you won’t use until and unless an extreme urgency arises. It would be better to save enough money that could last you at least 3 to 4 months when your major source of income gets stalled. If you get sacked from your job or a financial crisis arises, these funds can help in managing essential household expenses without having to borrow money or take loans.
Keep adding up money each month so that you can sleep without worrying about an uncertain future. You should keep the emergency savings in a separate account so that they aren’t readily accessible. Estimate your monthly expenditure so that you know exactly how much you should be saving. Slow and steady wins the race. Stay focused and continue saving bit by bit.
Clear off all the Debts
Proofing up your finances requires that you clear off all high-interest debts on a priority basis. The most important thing that you should be focusing on is paying off credit card debts and other loans for which you have to pay a significant amount as interest each month.
Figure out the interest rate you are being charged and plan a strategy to clear the debt as soon as possible. Even if it takes time, your agenda should be to pay it off at the earliest.
Getting rid of the debt or loan will free up some space in your wallet and you can plan to utilize the money you were paying as interest for investing in profitable markets. Whether it’s a student loan, home or car loan, personal debt, or credit card debt, start planning today to pay it off on an urgent basis.
Update your Resume
The world has witnessed closely how a sudden job loss as a result of cost-cutting measures taken by organizations and businesses can affect the livelihood of the masses. Hundreds and thousands of people lost their jobs during the COVID-19 pandemic and were left stranded with bills to pay and households to manage. The lay-off trend is gearing up again and the news of somebody getting sacked from their jobs keeps popping up here and now. People in the IT and media sectors have been losing their jobs since the pandemic started and it doesn’t seem to end anytime soon. Other industries are also fearing a mass cost-cutting drive and employees are getting panicked.
The smart move in such scenarios is to prepare yourself for the worst. While you won’t be able to escape job loss during the time of recession, you can take measures to minimize its adverse effect on your life. Keep your resume updated. You may have no control over your job security but be prepared to have an alternative plan for employment. Also, it’s a good idea to start professional networking. Update your LinkedIn profile if you have any or sign up for one if you do not have an online presence on one of the biggest professional networking platforms. Be specific about your achievements and skills and keep your profile up to date. It can help in attracting potential employers who can provide you with a reasonable financial opportunity in wake of a lay-off.
Go Beyond the Conventional Ways of Saving
Be creative. Think beyond the conventional modes of saving and adapt to more creative ways of saving money. For instance, you can evaluate your personal insurance plan to see if you have signed up for the best program can make quite a big difference. Look for other ways other than your job to make more money. You may request a salary increment, invest money in stocks, buy cryptos, or participate in any financial opportunity that can help you make money passively.
Invest your Financial Assets
Generally, all stock markets collapse ahead of a recession and rejuvenate before the economy gets back on its knees. So now when speculations about a recession are at an all-time high, it would be a good idea to purchase stocks as prices would be at the lowest. But you do not have to just throw your savings away in the stock market. Figure out your long-term investment goals so that you know when or how to sell your investment to make profits. Also, you may need to let go of some underperforming investments that fail to yield fruitful results. Also known as tax-loss harvesting, this will help you bring down your taxable capital gains. It’s better to invest the money for higher revenue returns rather than keep it safe in your bank account. Invest with money that you won’t need in the next 2 to 3 years. It’s a wise idea to accumulate wealth for long-term plans like saving for your kid’s higher education and your retirement life. Strategize your investment plans to keep them aligned with your life circumstances.
Trim Down on Daily Expenses
Evaluating your daily expenses critically can help you save a good deal of money. It doesn’t require rocket science and still yields fruitful results. Opting for a cheaper internet plan, choosing an affordable network calling plan, dining out on a budget using apps like Entertainer, Deliveroo, and Talabat, transacting money using cashback credit cards, participating in loyalty programs, eating out less, and doing free things and activities as a family for leisure can help in cutting down the monthly costs.
Find Ways to Generate Passive Income
Generating revenue through passive income sources is the best thing you can do for getting financially independent. However, it takes time and effort to find such streams and utilize them to the best of them.
Signing up for affiliate programs, recurring commission schemes, buying cryptos, investing money in real estate, setting up an affiliate blog, creating a YouTube channel, Influencing audience through social media, registering for a best saving account, stock trading, peer-to-peer lending, and buying rental property are productive ways to earn money passively.
Learn New Skills
The adverse effects of the recession may go unnoticed for some months after the economic turmoil begins. This gives them a good amount of time to people to prepare themselves by getting upskilled.
If you can set aside some money, it’s better to participate in some skill development programs and professional growth courses. Learning a new skill and getting certified for your existing skillset is a good idea to stay updated with the current market trend. Become indispensable. Learn and grow. Update your skillset and expand your knowledge so it gets difficult for your employer to let you go. If you are thinking of getting a new job, figure out what type of qualifications would be required to make a successful switch. If you are satisfied with your existing job and career, then improve your skills and get certified. Learning new skills using advanced technology can help you earn even from the comfort of your home. Invest some time and resources in yourself to build up new employment skills so that if you do get hit by the financial crisis, at least you have some competence, expertise, and ability to work as a freelancer.
Learn skills that are in demand such as digital marketing, search engine optimization, content writing, UX design, graphic designing, data analysis, data science, social media management, and web development.
There are a lot of free courses and degrees that you can register for online and upgrade your skill set to tackle any financial uncertainty that comes along.
Get a Side Hustle
If you do have some spare time, it would be better to do an additional job to generate some extra income. Learn a monetizable skill and find a suitable remote or freelancing job that can help in boosting your monthly income. Generating an income stream with a side hustle can help you grow your savings and manage monthly expenses with peace of mind.
It’s better to gear up and start doing a part-time job instead of waiting for something unfavorable to happen. As recession is expected to be around the corner, start a side hustle today and save well for uncertain times.
Speculations concerning a possible recession had been on the cards since the year 2022. Given the current financial circumstances around the world, the arrival of a recession in 2023 now seems inevitable. The majority of all big organizations and CEOs are gearing up for a recession that could hit UAE anytime during the year 2023.No matter when the difficult economic period arrives, it’s better to prepare ahead instead of crying over the split milk. The world has already been through a short-lived recession during the COVID-19 pandemic, and we all know how tough that had been especially for the economic growth and financial vitality of businesses operating around the world.
However, if you take proper steps and be prepared, you would be able to survive the global economic crisis. The rule of thumb is to stop worrying over things that are beyond your control. Keep focused on your job, update your skillset, start saving, keep your expenditures low, abide by the “less is more” rule, look out for innovative methods to grow your income, and be prepared psychologically and emotionally so you won’t break down when the storm arrives.
Acting proactively can help in reducing the level of stress during times of economic turmoil.