The idea of experiencing a recession in the future is something that most Americans are used to, especially after everything that has happened in the last four years. This article dives into how to combat such economic downturns so that readers can understand what can be done to escape the negative effects that go along with recessions. The first way to handle the decrease in money supply would be putting your extra cash in a high interest insurance account. Securing an emergency fund, will help with keeping the value of your savings high and reducing the likelihood of needing to borrow because of its liquidity. It is important to note that living within you means during good economic stability will help reduce the need to borrow when food and gas prices rise in economic downturns. The article suggests that trying to live off of one payroll instead of two for married couples is a good habit that will help reduce spending and increase savings for emergencies. Diversifying your income streams was another suggestion which can help increase job security by having multiple places that one can put their extra time into for pay. Next is investing, and just like any good financial advisor this article preaches about investing in the long run and diversifying your portfolio. Diversifying helps with managing risk within the market, making sure you do not invest in one particular section of the economy mitigates the risk of completely loosing everything if that section collapses. They also emphasized the importance of investing for the long run, saying that you haven’t lost the money until you sell, so it is important to be aware that panic is what often leads to even worse situations. When prices are down it is almost like they are on sale, so in some situations it can be beneficial to take advantage of that if you have the means. As long as you are not invested in one place, this will help mitigate any major losses seen throughout the entire economy. As someone who plans to be a part of the workforce in the next two years, I thought this article was helpful in outlining some of the priorities I should be setting for myself.
7 Ways to Recession-Proof Your Life
This is an interesting article however most of the ideas and "ways" they suggest are for the middle and upper class. While it was interesting to read about the different ways one can protect oneself from a recession, a lot of people struggle financially today and this the article doesnt seem to provide a way for people of lower income to protect themselves. Investing and increasing an emergency fund are for people who already have a some disposible income, and thus might not be as vastly impacted by a recession. I wish the article dung deeper and provided ways that are useful for the majority of Americans.
ReplyDeleteWhat specific strategies mentioned in the article do you find most practical and feasible for individuals to implement in preparation for a recession, and why?
ReplyDelete