12 Ways To Navigate A Recession
These are twelve ways to navigate a recession and come out better on the other side.
There has been newspeak about a soft or mild recession. Some people in the media seem afraid to say that there is a recession. The banking crisis is likely the start of another financial crisis. The crisis is a textbook example of a boom and bust cycle. At the very least, inflation is not likely to decrease. Historically, one of the primary indicators of a recession has been the inversion of the two-year and ten-year treasury yield curve.
With the rising prices from inflation, shrinkflation, and job cuts, you can see that this is a recession potentially heading into a depression. The good news is that these are twelve ways to navigate a recession and come out better on the other side.
12 Ways To Navigate A Recession
Live Below Your Means
The first way to start to live below your means. Many Americans are in debt and rely on credit cards to pay their bills. They were not taught this foundational money management principle. Other benefits of living below your means are you will be able to save and grow an emergency fund. You can then direct your savings toward other investments you may be interested in to start building wealth. You can start by only living on the necessities. As your income grows, you can then at other things like entertainment while staying true to this principle.
Cut Unnecessary Expenses
You can look for areas in your daily life where you can actively cut unnecessary expenses. Some simple ways are to eat out or go out for drinks less or to cut out those activities which quickly add up. You can purchase fewer expense options to lower your everyday expenses. For example, you could buy the store brand rather than the premium name. You can also decrease your spending by canceling memberships and subscriptions you do not use or that don’t improve your life. An example could be paying an entertainment subscription to avoid watching advertisements, but you only use that app or website a few times daily. There are always solutions to cut down your spending.
You can use the money you save from unnecessary expenses to pay off any debt. You can save or invest that money if you don’t have any debt.
Follow A Budget
The best way to track your money is to know where every cent is going. This is where a budget can help you. When you do not have a budget, you won’t know how much money is going where, and you are more likely to overspend each month. YNAB (You Need A Budget), Mint and Empower are three popular budgeting apps.
There is the popular 50/30/20 budget. There is also the 60/30/20 budget. You can decide which budgeting strategy works best for you.
Move To A Less Expensive State Or Country
You can move to a less expensive state or country if your job allows it. You could move to a more affordable state to save money by paying fewer income taxes, which has a lower cost of living. You can compare where you currently live to another state where you could move to save money. If your company has an office in another state, you could ask about being transferred or changing employers or jobs to make a move.
If you work remotely, are a freelancer, or have an online business, you could move to a less expensive country. You could increase your standard of living by deciding to move to a country where you can get more for your money and live on less each month compared to where you may live. If this interests you, you can look at the cost of living in different countries.
Moving overseas works best for someone who makes passive income and has an online business. This is because they have less risk that something will happen to their income streams. A remote worker or a freelancer will have that liability if they decide to move abroad since they do not control their job.
Build An Emergency F.U. Fund
An emergency fund has many names, but the purpose remains the same. An F.U. fund is there to help you in case something happens to you that you did not plan for. You may get fired from your job, or an unexpected health emergency may come up. A good starting goal is to have at least one year’s cost of living expenses saved in your emergency fund. That way, if anything happens, you know you are prepared and covered. You can leave at any time rather than being entirely dependent on an employer.
The three best options for where to store the money for your F.U. fund are:
A savings account that connects to your checking account.
A money market account that provides you with check-writing privileges or a debit card.
High-interest savings account through an online bank.
You want your emergency fund to be in an account that is liquid. You can then reach into your emergency fund when you need it. You will be ahead of most Americans by having money in a savings account because 56% of Americans cannot cover a $1,000 emergency.
Learn New Skills To Increase Your Skillset
You can work to learn skills to make yourself more valuable to your employer. You could study for a certification. You could take an online class. You could take a digital course on a topic you want to learn more about that could help you. You could read about a topic or watch videos to learn how to do something. There are free and paid ways to continue building your skill set.
Find Ways To Increase Your Income
It is an excellent idea to always be on the lookout to find ways to increase your income. You are losing money if you depend on a fixed income or your wages have not risen to meet inflation. You want to at least keep up with inflation. To do this, you could take on a second or third job, negotiate a raise with your current employer, start a side hustle, or consider starting a business.
Negotiate Your Salary
You can try to negotiate your salary with your employer. You can research online and talk to people in similar positions to you to help determine if you want to consider talking to your manager or boss to increase your pay. You will want to be prepared to make your case to your employer. You will want to prove that you have made positive contributions to the company you work for by listing your accomplishing and showing that you are a net positive to your employer.
The biggest problem with being an employee is that you are replaceable. You can be replaced by someone willing to do your work for less, someone more skilled than you, and now by robots. Unless you can make a good case to your employer and have a backup, know that you may be taking a risk by asking your employer to raise your salary.
Start A Side Hustle
A side hustle is a good option to bring in extra income, which can help you to increase your savings or ability to invest. There are many side hustle options today. The best way is to monetize your skills and interests or start a small business. Depending on your skills, some can be done online to save money without driving to work. Popular side hustles include:
You could become a freelancer on websites like Fiverr and Upwork.
You could monetize your skills on an app like Thumbtack.
You could drive for Uber or Lyft. You could deliver food for Grubhub, Uber Eats, and similar companies. You could deliver groceries for Instacart.
You could rent out a room or trailer on Airbnb.
You could figure out how to turn a side hustle into an online business.
Find Ways To Make Passive Income
You can find ways to make passive income. This is easier to do today because of the Internet. It does take longer to make passive income compared to the traditional active income you receive from an employer. However, once you have money passively coming in, you know how to do it. You can then replicate and repeat the process to grow your income.
You could do this in many ways, but most people often begin with affiliate marketing or advertising on a website or YouTube channel.
Start An Online Business
You could turn a passion or a side hustle into a business. With the Internet, you now have the option of starting an online business. The great thing about an online business is that it most often requires less startup capital than a traditional brick-and-mortar business.
There are lots of opportunities to make money online today. You can start small by learning about affiliate marketing and advertisements on a website and YouTube channel. You can then branch out to make your products and sell services. You can sell e-books, physical books, merchandise, digital products, subscription services, and digital courses. You could be a consultant or coach to your customers, depending on your experience and niche. The great thing about a business is you can work to find new income streams to continue to grow it.
Invest In Yourself
Most people talk about investing in the stock market or real estate, but rarely in yourself. You are your own best investment. You can use a recession to develop yourself to improve on the other side. You can learn a new skill. You could find creative ways to make extra income or build passive income. You may use this time to build an online business after being fired by your employer. You can always find a way to improve your health, finances, and feelings about yourself.
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Summary
You can use a recession to invest in yourself by developing skills, improving yourself, and finding ways to increase your income. There are always opportunities to be found, especially when many employees may be fired and companies go under. You have options.
You can use this turbulent period as an opportunity to improve yourself and come out of it better on the other side.
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