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Why Recession Prep?
So why prepare for a recession?
This isnt necessarily confined to any particular age group, income bracket or industry concerns are universal.
Recordinflationhas impacted essential expenses like rent, groceries, gas, insurance and home prices.
TheSahm Ruleis used to detect the start of a recession quickly.
Developed by economist Claudia Sahm, it focuses on changes in the unemployment rate.
Michela Alloccas 4 Tips for Recession Prep
1.
Take a Financial Snapshot
Allocca suggests starting by getting a firm understanding of your current financial situation.
Review your accounts and get clear on how much you have and where, she said.
Start by listing all your bank accounts, investment accounts, retirement funds and other assets.
Then list all of your debts, such as credit cards, student loans or mortgages.
This gives you your net worth the difference between your assets and liabilities.
List all sources of income, including your salary and any freelance work or side gigs.
Then, compare that to your expenses by reviewingbank statements and receipts.
By auditing your outflow, you might identify areas where you might be overspending.
She describes this as auditing your cash position.
Allocca lists two options for where to keep cash.
One option is ahigh-yield savings account.
Allocca says that this is a great place for your emergency fund or any other short-term cash savings.
Another option is a certificate of deposit.
Reevaluate Your Financial Goals and Spending
Allocca recommends taking a closer look at your financial goals and adjusting them.
There are three areas she focuses on:
To manage your spending, Allocca recommends trying a spending detox.
This is a period of time when you eliminate any expenses that are not essentials.
Uplevel Your Skillset
Improving your skills can increase your job security and open up new opportunities.
Allocca emphasizes that skills are corporate currency.
She recommends that you focus on both in-office skills and outside-office skills.
In-office skills are abilities related to your current job or industry.
Outside-office skills are ones that can be leveraged in the freelance market or used to start a side business.
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