When you look at today’s global environment, you would definitely say it is not looking good in many aspects. From the war in Ukraine, the continuous tensions between the US and China, and the effects of climate change to the onset of inflation in many parts of the globe, there doesn’t seem to be any hope of it changing anytime soon. While there are efforts to try to restore the world order and reduce the economic impacts it has on the rest of the world, it is clear that tentative agreements and peace can be broken on a whim of a country if they have the power to do it.
Because of this uncertainty, there are now talks about whether the world will face a global recession. Many economists worldwide agree that a recession will be inevitable in 2023 because of this uncertainty. Recession often occurs when there is a massive shift in the stock market, which will cause it to decline, and there is widespread unemployment. When this happens, spending is dramatically reduced at all levels, and economic recovery may take years before it occurs.
On a personal level, a recession can increase the chances of a working person being laid off from their employment if their companies decide to cut off spending. Business owners may also find it hard to do business due to reduced spending. Living standards will also shift, causing difficulties in surviving on their current wages. While benefits are available, they may be difficult due to the number of people who will fight for them.
Before recession ultimately affects your life and it is declared in your country, here are tips on what you can do to prepare for it:
Start An Emergency Savings Account
Whether there is a recession or not, it is always recommended that you have an emergency saving account to cover at least three to six months’ worth of expenses just in case you find yourself in a bind or out of a job. With the recession causing governments to increase interest rates and triggering an increase in prices from daily items to gas, you will need emergency savings account on standby to manage your daily expenses and necessities.
Even if an ideal emergency savings account takes years to make, you can still start later. If you are beginning to make one, try to save at least the amount you can use on a tight budget for three months in case you or your partner lose your job. Make sure this amount will cover all your immediate bills like electricity, water, gas, food and medicines.
You can also speak to your employer to automatically send your paycheck or a part of it into the savings account so you don’t use them for unplanned expenses. Only use your emergency savings for recurring payments if you no longer have an avenue to pay them.
Know Which Expenses To Skip, Reduce Or Adjust
As you try to save money, you now need to assess which expenses and purchases you need to skip, reduce or adjust. As much as possible, try putting off any luxury purchases you want. For example, if your television breaks, check if you can still get it repaired before considering buying a new one. If you have an old toaster that is 5 years old but can still toast bread, don’t buy a new one and save the money for later.
If you have online subscriptions, ask yourself which ones you can cancel or if you can go for a lower-tier subscription. For example, Netflix now offers an ad-supported subscription cheaper than their lowest ad-free one. You can also opt for trials if you will not use the product or service for long to save up costs.
You can also check for price changes for many discretionary goods, which often happens during a recession. These goods drop prices to get people to purchase their products.
Stock Up On Essentials Early
It is not a bad practice to stock up on your essentials early, as well as items that you can store on your shelf for a long time while you are still getting paid and prices haven’t increased to severe amounts yet.
However, don’t go overboard with the stockpiling because you may end up with too much, and it will expire on you if you are not careful.
It would help if you also took this time to clear your debts as much as possible, especially those with high-interest rates. This will enable you to open up more money for your expenses and other necessities.
Avoid Going Over Budget And Overspending
If you want to hold on to your money and make sure you do not run out of funds once the recession hits, it is best to avoid spending too much. Always have a clear list of where your budget will go and how much you will save, and stick to it. As mentioned above, skip any luxury purchases until your finances become stable or you need to replace your existing items.
If you own a credit card, it is best to resist using it because the interest rates you have to pay the longer you cannot pay it. If you do not own one, avoid opening one, so you are not tempted to spend more. This also goes for other forms of credit, such as loans.
Whether or not a recession is declared next year, we must be prepared for all eventualities considering our uncertain times. You can never tell what will happen in the coming months, and if you are not ready, it will be challenging to scramble to get funds and pay for your expenses. By preparing early, you will be able to face the recession head-on until everything becomes stable once more.
Looking for other articles on the same topics, here they are:
6 Secrets for Searching for a Job During a Recession
Everything You Need to Learn about Recession
Managing Your Career Development in Uncertain Times
Can’t get enough of MiddleMe? You can find me sharing my thoughts here as well:
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It’s an uncertain time here in Australia too on the economic front. But all we can do is be aware but not be obsessed and make smart decisions. Lots of good tips in your post, thanks.
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Food shortages can be mitigated if you’re prepared to be a little adventurous. I’ve been using besan (chickpea flour) and quinoa this year.
Fabulous post, Kally!
Kally, the market has been up for a long time, it is destined to fall. The expected recessive results of Brexit and the Russian invasion of Ukraine are not helping matters. Not to mention, we are still dealing with tariff wars that disrupted supply and sales chains. Keith
Again, solid advice for ANY time, whether a recession is pending or not! Most Americans could go on a food diet and save hundreds of dollars to get closer to the weight of the woman in your Featured Image. And too many garages are stuffed so full they cannot park their cars where they belong; Self-Storage is now a major industry because we collect so much STUFF we can’t even fit it in our houses!!
The biggest idea is to trust God to provide our “daily bread.” Of course, this is not just a reference to only food, but to all resources. Stock up modestly, but not so much that some things will spoil or run out of usefulness due to age. Don’t overstock with five screwdriver sets (redundancy), but keep trusting Father to supply our “NEEDs,” not necessarily our WANTs.
If HE is your Source, you can rest easy at night, knowing “God is faithful. He will not allow you to be tested beyond your ability, but when he tests you, he will also bring about the outcome that you are able to bear it.” 1 Corinthians 10:13 EHV
Some excellent advice! Thank you, Kally. Elisa
Great advice, Kally. I’m also grateful for the internet – comparison shopping saves money on prices and on transportation costs (if we were to go store to store to shop).
Great points, Kally. The uncertainty is the worst, but hoping for the best while still preparing is essential. ;0)