1. Understand Recession
Recession is historically just a normal part of the economic cycle. Every few years we go through it and come back out. History is not a perfect indicator of the future, but it is about the best predictor we have. For some it may feel like it is the end of the world and everything is falling apart they forget that it’s a cycle. Understanding recession will give you some peace of mind and will take away the unknown factor.
2. Dump Debt
Debt was one of the primary causes of the recession. If you have any consumer debt try to get rid of it asap. Don’t get fooled by the low interest rates, you’ll end up spending and even low interest is still interest. If you have credit cards you can call your institution to reduce your rates or transfer them to a new card with low rates, than pay it off as fast as you can.
3. Build Your Emergency Fund
Having an emergency fund is critical, but an astonishing one-third of Americans have none. 57% of those who have a fund don’t have enough in it to pay for one month’s expenses. Unexpected expenses are a part of life. Proverbs 6:6 encourages us to save up for times of need. If you don’t have any extra reserve, start today.
4. Cut Costs
Reduce your spending. Often you can reduce your bills if you call your service providers and ask for it. It may not always work but it is worth a try, last year I was able to cut my cable bill in half and reduce my cell phone bill by $50 per month.
5. Balance Your Portfolio
Balance your portfolio on regular bases to stay within your asset allocation. The recession will bruise your portfolio, but do not panic. Do not be afraid of stocks if you have a long term view, recessions are the best time to purchase good long term investments.
6. Make Yourself Un-downsize-able
If you are worried about your employment, make yourself more useful to your company. Learn new skills and attend extra courses. Make yourself indispensable.
7. Diversify Your Income
Diversifying your income can act as a buffer during a recession. If you haven’t already started this process, now may be a good time to think about it. This means learning new skills and finding new ways to bring in income.
8. Continue Your Plan
If you are saving for long term goals continue to do so. According to economist Roger Ibbotson, recession is a bad time to change your investment strategy, so if you are a buy-and-hold investor continue to do so.
9. Increase your trust in God
Of all the points on this list, this one is by far the most important. Philippians 4:19 tells us that God WILL take care of all our needs and if we trust in Him, we have nothing to fear from any economy or recession because there is never a recession in God’s economy!