Ways to Prepare for Recession

Listing down the 13 Steps that you can take to prepare for recession:

1. Cut your spending
   1. To prepare for difficult times, step 1 is to cut your spending
   2. Cut the subscription you don’t use
   3. Or the gym membership where you are not regular
   4. Meals out in a fancy restaurant, trips or vacations
   5. Sure, you need to treat yourself sometimes but it should not be a regular
2. Get Budgeting
   1. Making a budget and sticking to it is the corner stone for getting your Personal Finance together
   2. And if you are not keeping tracks of what you are spending on, you are throwing a lot of money away
   3. Record your spending and set targets and try to stick to them
   4. Follow the 50/30/20 rule - 50% should be spent on necessities like Rent/Home loan EMIs, phone, internet, groceries; 30% on wants like entertainment, hobbies, trips and vacations and the last 20% on Savings and investments
   5. For tougher times like now, switch 2nd and 3rd and even try to increase more on savings and emergency funds.
3. Set up an emergency fund
   1. And speaking up at No3. is setting up an emergency fund
   2. Having cash for emergencies is basic of Personal Finance. And in recession it is a must.
   3. Because you never know when disaster is going to strike - getting laid off or income source drying up in case of businesses
   4. In recession, the chances of this happening goes up which is why you should have enough money in the bank to cover at least 3 months of expenses and if possible 6 months to be safe.
   5. And if you did the previous step you should already know your needs and other expenses
   6. Once you got 3-6 months of emergency fund keep investing the money which you have. Why? It will be covered in the later part of the video
4. Pay off your debts
   1. If you have debts, this should be the priority.
   2. Because when the situation gets worse, paying the bare minimum will be difficult
   3. Pay off the debt now and you can thank me later
   4. If you have a number of debts, list them according to the interest rates.
   5. First payoff with the ones with higher rates like credit card as then have the highest interest rate upto 30 or 40%.
   6. Once you payoff the debt do not take any new debt unless absolutely necessary
5. If you can’t pay off debt, look into debt relief
   1. There can be chances that you are not able to payoff all your debts you should at least look into the debt relief.
   2. Call your banker or lender to find out what options are available
   3. But remember this can only be a short term relief
   4. getting rid of the debt is a better option but if you cannot look for other available options
6. Set up a high interest account
   1. This is where you should put your emergency fund
   2. This won’t be the biggest money making thing in the list but if things get tough, every bit will count
   3. Regular bank account gives very little interest rates so shop around to find out the high interest rate saving account
   4. It won’t be high but it will be some.
7. Prove how valuable you are in your workplace
   1. This is assuming you still have a job. If not there are plenty of advice ahead
   2. So if you are still working, prove how valuable you are
   3. Take on projects, learn new things and apply them. Go an extra mile
   4. Do these to make sure you are in a better position compared to others in case there is any job cut getting planned
8. start a side hustle
   1. It is always good to have a side hustle and in times like these the benefits of doing gets doubles:
      1. First it will give you something extra from your 9-5 job
      2. Second when your 9-5 is gone, this will be your fall back option
   2. There hasn’t been a better time that this to start a side hustle
   3. It could be anything that you know or are passionate about.
   4. It could be as simple as starting a blog, a YouTube channel or tutoring others on the skills which you already have
   5. If you are not sure how to start, go to sites like Fiverr or Upwork and see what kind of jobs are there for you to grab.
9. Get new skillsets
   1. Already talked about being valued at work and getting new work related skillset
   2. It can be anything related to your like of work ranging from :
      1. improving excel skills,
      2. video editing
      3. or coding
   3. It can also be inline with the side hustle you are working on
10. Consider changing your living situation
    1. While in money crunch you should consider other options available for living
    2. Like if you are renting, plan to move somewhere less expensive
    3. If you own a place or on lease you can also thing about getting a roommate
11. Keep on investing
    1. If you regularly put money for long term investing, you might be hesitant to keep on investing, thinking, the market is anyway going to fall
    2. So the best strategy should be to sell as market starts to fall and wait for market to hit rock bottom to start buying.
    3. This is easy saying than done. It is almost impossible to do even for the professional investors
    4. History tells us, market always reaches new heights after each recession and rewards handsomely to those who are always investing
    5. Keep on investing in systematic manner and average down your investment rate
12. Diversify your investments
    1. For people who do not posses the professional skill of investment you should never put huge money in individual stocks
    2. Diversify the portfolio by investing in index funds or other broad market funds
    3. This should usually be the investment strategy in stock market but is more stressed during the bad times of recession
13. Take a long-term approach to investing
    1. As an investor playing the long term game you should always think the long term timeframe
    2. It can happen that your stock fell 20% in a day or the whole market fell substantially
    3. Do not panic and start selling as the market always recovers and takes to a new height
    4. You should also not check your portfolio daily unless you are doing day trading or placing some risky short term bets.
    5. Check once a week. This will also help with the fear and anxiety