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Recession is around the corner… Here’s How to Thrive When it Hits
As we all know, because of covid19, a recession is around the corner. Many people will be affected badly during the recession, while some of them will escape it altogether. This article will review how I and many other individuals in personal finances are handling the situation, and how we have prepared ourselves for the recession as well.
Various Types of Recession
How you prepare for recessions depends highly on the type of recession you are going through.
- Some recessions are called “pandemic” recessions, because of the simultaneous onset of two negative economic periods. Examples of such are the Great Depression and the post-World War II global recession. However, how you Prepare for recessions also depends on the severity of the depression you are going through.
- For instance, a mild recession with only a mild amount of unemployment will require you to do a little careful budgeting. For instance, your post provides emergency fund which you will need to pay for all your short-term expenses until you get back to a normal situation. You can use your emergency fund to pay for overdue utility bills, medical expenses, and even rent and mortgage payments. However, you need to make sure that the emergency fund never gets depleted as that would mean the end of your standard of living.
- A more severe recession may involve a pandemic. Let’s say, a virus has swept through your city killing hundreds of its citizens. Your post supplies you with adequate medicines to fight the outbreak. In order to survive the pandemic, you have to ration out all your resources-food, shelter, medicine, etc. How to prepare for this kind of a recession?
What You Must During Recession
Well, what you do in such a situation is to stock up on all the vaccines (if there is a crisis), cook up huge crocks of food and stock up on blankets, etc. Your family will be forced to take up all kinds of jobs such as washing, cleaning etc. How to prepare for such a recession? Just follow the same strategy that you did during the good years: cut down on your spending and increase your savings.
How to prepare for a recession when there is a Pandemic?
You can make a list of all the things that are necessary and the things that are unnecessary. Look at your budget. If your income is only sufficient to cover your expenses then you can definitely live on your salary. However, if you are living on your salary and there is no additional money coming in due to your job cuts or salary deduction then you are left with nothing to survive on. That’s why, you should do all you can to cut down on expenses and increase savings.
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