If you’ve tuned in to the news lately, you’ve undoubtedly heard whispers about the U.S. economy headed for recession. You may have also heard that it is probably not headed for recession. Leading indicators are sending confusing messaging about the health of the economy and what we might expect to see in the coming months. Instead of spending time speculating, we should turn our attention to actionable steps that we can take right now to help us prepare to capitalize on opportunities that may come during tough times.
Evaluate your finances
Analyze your full financial picture: assets and liabilities, income and expenses. The time to review or create and execute a financial plan is now. With yearly inflation, your money may not go as far as before, so stretch every dollar as much as you can.
Create a lean budget
Review your essential and nonessential spending. If your cash flow declines by 20-25%, what can you trim from your budget? Work through a couple of different scenarios with your family.
Conserve your resources
Recessions create bargains. They might be stocks, real estate, simple consumer goods, a business opportunity or equipment. Try to build up some cash reserve now, so you are ready if an opportunity presents itself.
Consider waiting on large purchases
Holding off on a large purchase could have two effects: saving cash and potentially positioning you for a better deal later. If you can live without it, consider waiting on that large purchase.
Sharpen your skill set
Companies may lay off employees to save costs, so do what you can to ensure it’s not you. What skills can you add that make you more marketable? Consider new ways to make yourself more valuable to the company. Recessions are part of the economy; one of the best things you can do is accept that and be proactive about doing what you can to prepare. Having a budget, improving skills or crafting a financial plan are good ideas, in good times and bad.
Article adapted from Forbes.com