With the threat of an economic downturn at hand, we understand your financial fears. This post addresses those concerns by examining how to recession-proof your finances. If you’re like most people, keeping your family protected is a top priority. But in the wake of a life-changing pandemic, protecting anything can seem like an impossible feat. Take heart knowing that your finances don’t have to take a fatal nosedive — even amid an economic slump.
1. Know Your Financial Position
Any well-known financial guru — Dave Ramsey, Suze Orman, David Bach, etc. — will first tell you to take an honest look at your financial situation. Before you panic and reach for your mattress cash or empty your piggy banks, get up close and personal with your moolah.
Choose to accept whatever financial position you are in, and understand that you can influence your life. It doesn’t matter if you have thousands of dollars in the bank or pennies hiding in your couch, you have an element of control.
If you feel helpless or like a victim of the COVID-19 crisis, it’s only natural. We have all been impacted by this worldwide calamity. However, by using your money strategically, you can recession-proof your finances and protect your family from a heart-breaking struggle.
The first step is knowing where you stand financially. So, do your best to learn whether you will have a steady income in the future. Plus, research if you can get a break on any debts or utilities. The information you gather might not be ideal, but it will empower you to better face the future.
2. Keep an Eagle Eye on Your Cash Flow
Despite what the Monopoly playbook says, managing money only comes in handy in real life. In other words, cash flow is everything!
The thing is, the economic downturn has produced more unemployment than ever recorded. Therefore, having a significant or steady cash flow might be a “luxury” of the past. Still, that doesn’t mean you have to turn a blind eye to your incoming and outgoing money.
More than ever now is the time to keep a watchful eye on the money you have and make it go where you want. That said, some of the wealthiest people alive have a habit of knowing what they spend their money on precisely. According to Entrepreneur, the average millionaire lives on a monthly written budget.
An excellent idea is to follow the example of folks who have this money thing mastered. Don’t take your eyes off your cash flow for a second — even if it seems like a faint trickle.
3. Don’t Underestimate the Impact of Side Gigs
The funny thing about knowing how to recession-proof your finances is that this life skill doesn’t depend on your full-time career. Sure, it’s incredibly helpful to have a stable job — but we’ve witnessed how quickly a novel virus can erase that security.
How do you hunker down and increase your cash flow without the certainty of a full-time career?
One relentless approach is to tap into other areas of work. For example, many people have made a living on gig work or side work. Consider freelancing (i.e., writing, consulting, graphic design), mowing lawns, and completing odd jobs for neighbors and friends.
Moneycrashers features a helpful review of profitable work in the gig economy. To recession-proof your finances means being as resourceful as possible. The gig economy thrives on resourcefulness.
4. Diversify Your Income and Investments
With the gig economy in full swing and many companies making remote work a reality, people can remain at home to follow “shelter-in-place” orders more comfortably. But if you have kids at home, remote work can become a challenge in a matter of minutes.
Of course, having children at home isn’t the only challenge to continue working during a pandemic. It might be tricky to find full-time work, or perhaps your internet connectivity creates issues. Nevertheless, relying on one source of income or investment is a risky business.
An excellent strategy to tackle these disadvantages is to diversify your income and investments. The Balance advises using passive and active income, which means you can earn money when you’re working and not.
During an economic slump, knowing how to recession-proof your finances is doable — but you must get creative. Tap into your hobbies and tone up your skills!
5. Face Risks Head-on
When COVID-19 hit our shores early in 2020, many people wanted to bury their heads in the sand. The only problem with this approach is that hiding or denying an issue only creates more significant issues.
As a result, the businesses that didn’t shutter held on for dear life by offering limited services. And families followed a similar strategy. People dropped services, such as cable TV or gym memberships. Unfortunately, some people panicked and canceled insurance policies without careful consideration.
Most folks forget that canceling an insurance policy often has ramifications down the road — no matter the type of insurance (i.e., life, auto, home). Sometimes, it’s more challenging to purchase another policy. Plus, you don’t always get a full premium refund. And paying for a loss out of pocket can be outrageous.
A better approach to recession-proof your finances is to play the long game. Protect your family and stick with your insurance policies. Remember, you can typically adjust your coverage instead of calling it quits. Life insurance is exceptionally crucial because it’s for your loved ones more than for yourself.
Take the Next Step
It’s tough knowing how to protect your family after you’re gone, especially with such a vast amount of information out there. But we can help!
To support you as you safeguard your financial security, I’ve created an up-to-date guide for parents who need life insurance here. My guide can help you with your long term life insurance goals, especially with a family to nurture at home.
Here at CB Acker Associates, we want to help you take care of your family. If you’re ready to find a policy that fits your needs and your budget, we can help!
With access to all the top-rated life insurance companies, we work extra hard to get you the best life insurance rates possible. You can even compare rates and benefits from over 40 providers with no obligation to buy here. Plus, it’s fast—under 60 seconds kind of fast.
Please, give us a call today at 650-969-5844 or email [email protected].