Nancy
5
All posts from Nancy
Nancy in Stack That Money,

How to Safeguard Yourself from Recession?

How to Safeguard Yourself from Recession?

The reason billions of people throughout the globe fall prey to times like recessions is because they are always unprepared for them. They ignore the fact that the cycle of growth to boom period to peak growth to recession and so on never ends, and one may usually come across such recession periods quite a few times in their lifetime.

After all, if the past statistics are anything to go by, the U.S. seems to be going through a recession period every 5 to 6 years. Now though the intensity of these recessions periods vary significantly, it’s quite unnerving to be hit by them in an unprepared state. The major problem with such frequent recessions is that one may get hit badly just when they are on the verge of recovering from the last recession, or changing their financial future for good.

Hence, it’s always a good idea to safeguard yourself from recession, even if it seems to be far from being on the cards.

The below given are some of the seemingly basic, but highly useful tips that are sure to help you considerably when the world economy falls prey to a period of recession or other such economic downturn.

Diversifying your income

One of the major problems today is that people seem to be focusing only on one particular stream of income. Even if they plan to increase their income, they consider putting in more efforts into the same or their only stream of income. This may obviously turn out to be quite a big mistake, especially if their only source of income takes a significant hit when a recession period sets in.

People depending on only one source of income, let’s say their job, would probably be left with no income at all if their employers decide to go for downsizing during a recession. Hence, it seems important to not focus on just one stream of income, but also have a little backup in case you come across such an unfortunate situation.

Such other sources of income need not be something that requires a lot of time and efforts to set up. In fact, they can simply be a safe and secure investment option, which offers a certain rate of returns after a certain period. Such passive income is always going to come in handy during such financially disastrous times.

Savings, savings, and savings

You may not find it much important to control your desire for buying an expensive car and other such things, but you will surely regret not doing so when times like recession hits you. You might be thinking now that you are making enough to live comfortably all your life without having to place a lot of emphasis on saving money. However, things don’t remain the same, especially during times like recessions.

When you have a good amount of savings to look forward to, you don’t find yourself in a panicking situation even if your income goes down considerably or the value of your assets starts tumbling.

Say no to debt

A lot of people also seem to have made it a habit to resort to accumulating more and more debt for paying for almost everything, even if they can afford to pay out of their pocket. They might be finding it financially beneficial in some ways, but it seems that they overlook the major disadvantages.

After all, having a pile of debt may offer short term benefits like a little relief from taxes, but over the long term, it does more harm than good.

Learning from the past

The world has seen too many recessions in the past to ignore. One needs to learn from how these recessions had panned out, how it had affected the world economy, the reasons many people had to declare bankruptcy, and so on. Learning these things will help you in avoiding them in the future.