- Stop spending money! If you are worried about a recession, the best way to get ready is to stop spending on anything except necessities. Real necessities. Food and shelter.
- Build an emergency fund. Start with $1,000. Gradually build it up until you have 3 to 6 months of bare-bones expenses. Keep it in a liquid asset, like a money market fund or savings account.
- If you have debt, particularly consumer debt, pay it off as quickly as you can, highest interest rates first.
- Know where you stand, financially. If you’ve never done it, look at your cash flow (income minus expenses) and net worth (assets minus liabilities. You can’t get somewhere better if you don’t know where you are now.
- Take a skills inventory. Are there courses you could take or licenses you could earn that would improve your earnings potential?
- Diversify your investments. There are three main asset classes: stocks, bonds and cash. You should most likely have all of these classes in your portfolio. A “balanced” portfolio, for example, has about 60% in stocks or stock mutual funds, and 40% in bonds and cash. What does your portfolio look like?
Six Steps For Dealing With Recession
July 18th, 2008 · No Comments
Tags: Personal Finance
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