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If youre getting your finances ready to survive and thrive during a recession,avoid these six money mistakes.
The biggest hurdle tolong term successin investing is mental, Johnson said.
Research has shown that we suffer losses at a much higher rate than we savor gains.
Baseball philosopher Yogi Berra once said, Baseball is 90% mental.
The other half is physical.'
Its worthwhile to also think of investing as being 90% mental.
And, they end up selling low and buying high.'
Prepare yourself mentally for the ups and downs of the stock market, Johnson said.
In this case, having a cushion of three to six months living expenses can be a lifesaver.
it’s possible for you to prioritize building an emergency fund by setting aside small amounts regularly.
Make the most of automated deposits to your savings account.
Taking On Unnecessary Debt
About to make a big credit card purchase?
If a recession does materialize, you dont want to regret recently borrowing large amounts, Kullberg said.
If your income level changes and/or expenses rise, extra debt can put you in a very vulnerable position.
Focus on paying down any high-interest debt you already have, rather than adding more.
Not Adjusting Your Budget
Budgets are not set in stone andshould be updated regularly.
A recession calls for cutting back on non-essential spending and revisiting your priorities, Kullberg said.
One of the biggest money myths is that cash is king, Johnson said.
Over the long run, holding significant amounts of cash ensures that one will suffer significant opportunity losses.
When it comes to building wealth, one can either sleep well or eat well.
Investing conservatively allows one to sleep well, as there isnt much volatility.
But dont put all your faith in what others say no matter how successful theyve been.
Every financial situation is unique, including yours.
They may mean well, but your financial plan should be unique.
Only you know your situation.
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