There is far more to protecting yourself financially than securing your income. When it comes to a recession the best defense if to be prepared. Even if you are not there are things that you can do to protect your financial standings. Financial preparedness includes having an emergency fund for the unexpected, six months minimum expenses saved in the event that the worst occurs and a plan for your future.
Make a Plan
A plan for finances includes several things. There are questions that you have to ask yourself when you begin to make your plan. The answers to the questions will result in the actual actions that you take when you begin to make and live your financial plan. So what questions do you ask yourself?
*How much are my monthly expenses?
*How much do I need to cover six months of expenses?
*How much can I realistically reduce my spending by?
*How much do I have saved for emergencies such as illness or unemployment?
*Can I make my savings last twice as long as I have planned if need be?
When you come up to the answers to these questions you will be well on your way to making your financial plan. The monthly expenses you have will easily be covered by the budget that you have previously made. Knowing how much you have saved for the unexpected will give you an idea of how long you can make the money you have last. The budget you have will also give you an idea of how much you can realistically reduce your spending by. Once you get an idea of how much you actually reduce expenditures by you will know roughly how long you can stretch the money you have saved if you have no other choice.
Implement the Plan
Once you have figured out what you will have to do to ensure financial security during a recession you need to put the plan into motion. Decreasing spending and increasing savings during a recession will help you to make your income stretch further. What are you paying for that you don’t need? Cable, cell phones, there has to be something. Find these unneeded expenses and cut them out of your budget.
If you begin to reduce expenses when the recession first begins instead of waiting until it has hit your home full force you will be better off in the long run. When you begin to reduce expenses you also need to begin to look for additional income sources no matter how meager to assist in building up savings so that you are fully cushioned in the event of the worse. The worse being a complete loss of the income coming into the home.
Prepare for the Worst
When it comes to finances you can never be too careful. Preparing for the worse isn’t such a bad idea. Little things like stocking up on common household items will help you to ensure that you have them without having to dip into savings for them if your income suddenly stops. Buying non-perishable food items when you find them reduced will assist you in saving money and keeping food in the home during the roughest of times.
Protecting yourself during a recession is best done by preparing. Not to say that you need to panic but you do need to be realistic. A recession is a time to cut back instead of rushing out to buy everything you want because you might not be able to afford it tomorrow.