How To Prepare For An Upcoming Recession

It is hard to fathom a recession when all asset classes are increasing in value. But this is exactly the right time to make a plan to prepare for an upcoming recession. The time to dig a well is before you are thirsty.

I’ve linked all my accounts to Personal Capital to utilize their free tools.

Personal Capital provides a free tool enabling you to track your net worth, cash flow, budget, emergency fund, asset allocation, performance against benchmarks, any hidden fees and retirement planning.

Cut All Expenses Mercilessly After linking all my accounts, Personal Capital tracks all my spending and cash flow in an automated manner. I receive a weekly summary email.

Since most of us are working at home; you can cut everything from your Starbucks to restaurant food.  BTW eating or drinking any food not prepared at home is risky.  There is a possibility that anyone touching your food from preparation to delivery could be infected and not know about it.

While we may not agree with everything he says, there are nine decades of wisdom buried in Warren Buffett’s quotes.

Beef Up Your Emergency Fund After the Fed lowered rates to zero, it is no longer attractive to buy bonds. Online savings accounts followed suit and immediate lowered their rates. Don’t leave your money earning no interest. This is all the more relevant since now your Emergency Fund would now be much larger compared to the bull markets.

Leverage Your Human Capital Unemployment claims across the county have spiked up. The quarantine measures in various countries have decimated entire industries.  Unless you work for a government entity or in the medical profession; it is only a matter of time before your job will be on the line.

Human Capital is the biggest asset which you should now leverage. The free time you save by not traveling and staying at home can be used to add value at work.  Have regular conversations with your manager asking for more responsibility. This will ensure you are at the bottom of the “let us lay-off  these people” list.

Start Building Additional Income Streams Ideally, you should already have built additional income streams. But if you have not; then now is as good time as any to get started.

Swipe Up for more on How To Prepare For An Upcoming Recession