The 7 Best Tips for Surviving the Recession from Financial Experts

The Great Recession of 2008 brought financial ruin to many Americans. Many lost their homes, retirement savings and even their jobs. But the recession didn’t last forever, thankfully. Financial experts say that we are now in recovery, although some areas may still be struggling for years to come. Fortunately, we now know a lot more about how to manage our money wisely so that we won’t be as vulnerable if another recession hits again. Here are 7 tips from financial experts on how you can better manage your money in a time of recession and avoid getting caught up in an economic crisis again.

Pay off your credit card and other debt

The best way to survive a recession is to avoid getting into debt in the first place. It’s especially important to get rid of any credit card debt or other short-term debt, such as a car loan or a student loan, because these interest rates are typically very high. Make it a priority to get rid of these high-interest debts as soon as possible, even if you have to cut back on spending in other areas to do so. If you can get these debts out of the way before an economic crisis hits, you will be in a much stronger position should you lose your job or be unable to find a new one due to economic conditions.

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Build up your emergency fund

Economic recessions happen suddenly, and are therefore very difficult for people who don’t have savings to fall back on. Experts recommend having enough money in your emergency fund to cover at least three months of essential expenses. This way, if you lose your job or are affected by another economic crisis, you will have enough money saved up to cover your expenses while you are looking for a new job. If you can’t afford to save up that much money, you can start by saving at least $1,000, which is enough to cover many one-time or short-term emergencies. However, it’s important to remember that you shouldn’t use this money for anything other than true emergencies, such as a car repair or a medical bill, as you might end up getting into debt again if you misuse this money.

Take some time off work, and look for a new job or start a business. Don’t expect to be the first to find a job; you have to work harder than that before you will find it. If you can’t find a new job, consider moving to another city with more affordable housing, and then looking for a part-time job there. You can also invest in an apartment to save up for your future home.

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Diversify your investments

One of the main reasons why many people suffered massive losses during the Great Recession was because they invested all of their money in a particular type of investment, such as real estate or the stock market. This is called being “over-invested” in one particular type of asset and it can be a major mistake that causes you to lose a lot of money if the market tanks. Instead, experts recommend diversifying your investments, which simply means that you spread your money out among different types of assets. This will help you avoid losing everything if the market goes down, and it will also allow your money to grow more quickly because you will have a wider selection of investments that can yield higher returns.

Stick to a budget, even when times are tough

You probably won’t be too happy to hear this, but you should actually be more careful with your money when the economy is bad than when it is good. During good economic times, people tend to spend more money than they really should, often buying things that they don’t really need. During a recession, however, you will likely have less money to spend, and you may start to feel more grateful for what you have. This may help you avoid the temptation to spend money on things that are not really important to you. If you already keep a budget, you should try to follow it more carefully during a recession. If you don’t keep a budget, now would be a good time to start.

Don’t run for the equities just because everyone else is

Many people who lost a lot of money during the Great Recession felt like they needed to get back into the stock market as soon as possible after the economy started to recover. However, while it may be tempting to jump back in, this could be a big mistake. The stock market is highly volatile, and it could easily drop again. If you have been keeping your money out of the market for several years and are only now willing to invest it in stocks, you will likely get back in at a high point, which means you could lose a lot of money if the market dips again. It’s important to remember that you don’t have to jump in when everyone else is rushing out. Instead, make sure that you have a well-thought out investment plan that is based on your unique financial situation.

Conclusion

The Great Recession of 2008 was one of the worst economic crises in recent history. Fortunately, we now know a lot more about how to better manage our money so that we won’t be as exposed if the economy takes another turn for the worse. If you pay off your credit card and other debt, build up an emergency fund, diversify your investments and keep a budget, you will be in a much better position to survive a recession. You should also make sure not to run for the equities just because everyone else is. Keeping these 7 tips in mind will help ensure that you won’t be caught off guard if the economy takes a turn for the worse once again.