apple44 wrote: ↑
Wed Aug 21, 2019 5:23 pm
There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?
All I can think of is to stack up emergency funds because if we lose jobs, it will be difficult to find a new one.
Anybody who's weathered recessions before have any wisdom to share?
Your thoughts are on the right track with regard to making sure your emergency fund is well stocked and entertaining thoughts of preparing for any potential job loss due to a cyclical economic slow down. It's a good time to keep as relevant and productive as you can at your current job while also getting everything updated with your resume, references, and profile for any job hunting if needed. Never hurts to start sniffing around and looking at potential jobs within your niche as well while currently employed.
Does your household have diversity of income with regard to your human capital? Examples include spouses working in different industries, income that comes in from a side hustle or two, etc... . Explore the concept of those with stable jobs as income that is more bond like
, and those with jobs in cyclical industries being more stock like
. Figure out how your household income fits into that terminology when answering the question about diversity of income with regard to your human capital.
For those of us who have weathered previous recessions, each recession can be different in terms of what is impacted.
Provided you do not lose your job(s), one thing to prepare for is taking advantage of potential deals that may or may not present themselves at or near the trough of the economic slump. Deals could possibly include things such as appliances, autos, homes, bathroom/kitchen remodels, etc... . As the home building industry slows, you can often hire contractors at lower - or perhaps very competitive rates for a remodel, or home maintenance. If the timing of repair/maintenance for your home or autos is in sync with an economic slump, take advantage of deals being offered. If an economic slump hits the consumer with regard to retail, look for deals on things you may need to replace (clothing, electronics, linens, dishes, furniture, etc...). Again, if the need to replace these items is in sync with the slump - it's a good time to take advantage of it. Likewise, if the travel industry slows and it is in sync with your annual vacation or travel plans - take advantage of any deals you can find during the slump. The same could be said if a slump impacts the rental real estate income market. Perhaps you have been saving and waiting for such a recession to invest in rental real estate during a slump (along with thousands and thousands and thousands of others
Recessions come and go with each one being somewhat individually unique as well as impacting all of us in a different way.
If no job loss occurs, having lived and worked through several prior recessions - our advice would be to simply continue on with your automatic contributions to all of your retirement accounts and additional savings plans (college education funds, taxable investments, vacation fund, etc....) as if nothing is out of the ordinary. A recession will come and go just as they have in the past. Do your best to not let an economic slump impact your enjoyment of life.