The idea of yet another recession can be fearsome to picture.
According to Bankrate‘s latest Economic Indicator Survey, over half of the population of economists feel that economic dangers over the next 12 to 18 months are highly unlikely.
However, it’s not a question of whether or not recession will occur, but rather how you can financially prepare for the next recession.
Economy News Today – Prepare for The Next Recession
1. Set Up Your Emergency Fund
It can be difficult to just think about losing your job or any unfortunate events, but it’s crucial that you anticipate it and prepare for it.
If you lose a job because the economy is experiencing a hard time, then it might be challenging for you to land a new job with the same amount of income.
Setting up an emergency fund that would sustain you for at least 6 months would help you sleep at night. If saving a 6 month worth of expenses is impossible of a goal for you, you can start by depositing small amount into your savings account.
2. Start Paying Off Your Debts
There are several methods you can comply with to help you settle your debts. Two of them are popular, which is called the Debt Ladder and Debt Snowball.
The first method prioritizes debts with higher interest rates. The second method, on the other hand, prioritizes accounts with the lowest balances.
Whichever method you’d like to adhere to, it is crucial that you don’t have debts hanging over your head should recession occurs.
3. Be Aware of the Economic News
You don’t need to be an economist to get a sense whether the economy is progressing or deteriorating.
Usually, prior to a recession, there are major signs that precede the event. Among the biggest indicators is an “Inverted Yield Curve”. To explain in simplest terms, it occurs when short-term loan rates are significantly higher than long-term loan rates.
But still, no indicator accurately predicts a recession at all times. So, it is important to pay more attention to what is happening around you, especially to the changes in the economy.