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And contrary to popular belief, even the wealthy take these preventative measures.
Below are some ofthe expenses the rich cut when a recession is coming.
Discretionary Travel Spending
Salahi noted that high-income earners often start by reducing their discretionary travel spending.
My wealthy clients typically cut their annual vacation budget by 30-40%.
Last year, one of my clients, asuccessful tech executive, canceled his familys annual month-long European vacation.
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Melanie Musson, finance expert withInsurance Providers, observed the same.
If a recession might be coming, the wealthy will cut spending on overseas travel, Musson said.
They dont want the expense of airfare and lodging.
She saidaverage wage earnerscan follow this trend by limiting travel.
She added that staycations and local travel could become themore popular choiceover the next year.
Luxury Purchases
Luxury purchases face similar scrutiny, according to Salahi.
Designer clothing, high-end accessories, and premium automotive upgrades often get postponed.
Nischay Rawal, CPA and founder ofNR Tax & Consulting, noted this was a wise approach.
I always urge my high-net-worth clients to cut discretionary spending when a recession seems likely.
He said luxury purchases are the first to go.
For most people, cutting dining out, streaming services, and gym memberships can help build financial security.
Home Renovation Projects
Home renovation projects also get scaled back significantly.
They might repair a roof instead of remodeling an entire kitchen.
This practical approach translates well for any income levelfocus onnecessary home maintenancerather than aesthetic upgrades during uncertain times.
Entertainment and Dining Expenses
Entertainment and dining expenses also see substantial cuts.
Many wealthy individuals reduce their acceptable dining frequency by 50% or more, Salahi explained.
Personal Services
Personal services often face reductions, Salahi noted.
Regular spa treatments, personal training sessions, or household staff hours might be scaled back.
One client reduced their household staff from full-time to part-time, saving $4,000 monthly.
The everyday equivalent might be cutting a gym membership or decreasing the frequency of house cleaning services.
Real Estate
The wealthy stop buying real estate when a recession is coming said Musson.
For retirement accounts, now is the time to understand fund risks and possibly switch to safer options.
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