Opinion: How to Manage Your Finances during a Recession

Daniella Cressman

Disclaimer: This information is accurate and true to the best of my knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

Some are saying that we are already in a recession, technically speaking, while others claim that there is one looming on the horizon.

In either case, it's important to remain calm, cool, and collected despite the onslaught of horror you might be feeling right now.

BUDGET

If you don't already have a budget, now is the time to create one: You'll want to track every dollar so that you understand what your expenses are and where you might be able to cut back.

PAY OFF DEBT

If you have student loan debt or credit card debt, now is a good time to pay that off so that you don't have to deal with additional bills and high interest rates if a recession hits.

BUILD UP YOUR EMERGENCY FUND

Now is the time to have a very substantial emergency fund. If you want to be extra cautious, you might even want to save for an entire 12 months of essential living expenses. This should be around $30,000, but it could be more or less depending on where you live and what your lifestyle is.

INVEST

You can invest in the stock market at a discount, essentially, if you do so during a recession. Then, you can reap the rewards in the long run as the market recovers.

HOLD YOUR INVESTMENTS

It can be quite tempting to panic and sell all of your stocks out of terror when you see that your earnings have plummeted, but it's smarter to hold onto them and wait it out—If you take the latter approach, you could see major returns!

DIVERSIFY YOUR INCOME STREAMS

If you work a 9-5, perhaps freelancing on the side is a good idea. If you're already an entrepreneur who has 9 income streams and invests on the side, consider purchasing a real estate property and renting it out if you haven't already or put a bit of cash in gold or silver—The more revenue streams you have, the safer you are if your options decrease for one reason or another.

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Canadian-American author writing about local politics, personal finance, & dining in Albuquerque.

Albuquerque, NM
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