Preparing For Recessions - Some Tips For Staying Financially Fit In Tough Times

preparing for recessions tips stay financially fit economic downturns fiscal fitness

The world has been talking a lot about how the global economy might be entering a period of a recession in the near future. While it is not our business to decry this as a possibility or to encourage you to believe that it is going to happen, we still believe it is a good idea to talk about it. Because, it gives us an opportunity to have a talk about how to remain financially fit in some of the most economically trying times in the history of the world, even if they are not happening yet. Recessions are, after all, incredibly dangerous to households, small businesses and even individuals, especially when it comes to remaining even remotely close to as rich as you are. 

Stop Playing And Investing 

The first thing that you are going to want to do is to stop playing with your money. In this case, we don’t just mean stopping playing all of those 3 reel slots online, we also mean stop doing all of the things that cause it to not be your money any more. This means stop spending your money on things you don’t need, stop spending your money on things that you can go without and start trying to save this money. It is important to have had at least three months of operational costs saved up when the recession hits so that you can continue operating at a normal pace. Whether this means saving three months of salaries, three months of revenues worth, or something else, is up to the person or business managing the capital. 

The next thing to do is to stop investing the money. The stock market is going to fall in the case of a recession. The only thing you want to be investing in, if you are going to be investing no matter what, are safe-haven assets. This means gold, this means foreign currency such as Yen or Swiss Franc, or any other safe-haven investment that you can think of. This will allow you to retain your net worth no matter how far the currency inflates. It would also be possible to keep your funds in the form of cash, but that might backfire if the inflation is too high and you end up losing too much money as a result. 

Prepare And Start Saving Capital 

We mentioned this in the previous paragraph, but preparation goes a little further than just having three months of savings available to spend. Preparing capital means preparing an easily accessible pool of funds that you can use, without a second thought, in order to purchase goods and services that will be indispensable in the case of a financial recession. Three months of savings are the bare minimum of what an individual has to have in order to support themselves, or for a business. The optimal amount of savings it's equivalent to around six months of revenue. This will allow a business or an individual to remain active during those months of low activity and reap the advantages of being active in an economic downturn. But, there are more advantages to having a large pool of capital. 

Look To Invest At The Lowest Point 

At one point the recession will hit its lowest point. This is where the market prices for everything will be the lowest they can get in the context of the recession. This is when real estate is cheapest, when stocks are the cheapest and when all goods are cheapest. Having an easily accessible, large pool of funds available to you in a moment such as this might mean the difference between coming out worse off, or coming out better off than you were before the recession. After the recession is over, the economy is going to start growing again. If invested at the right time, the users will start seeing their own fund s grow astronomically, allowing them to be richer after the recession than they were before going into it.

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