The COVID-19 global pandemic is hitting the world with all of its might. If nations thought, it would be over in one wave, how wrong they were. The WHO is now issuing warnings about second waves of the pandemic. It will hit the world sooner than we think. This naturally means more bad news for the economy. This is also the reason why you will hear the word recession in 2020, more times than you ever did! So, how do you prepare yourself for this recession period? It is not something that we experience every day. In this discussion, we discuss ways to prepare for a recession in 2020!
Recession: A recap
However, before we dive deep down into the preparations for surviving a recession, we must first recall the basics of the phenomenon itself. In simple terms, a recession is a general decline in economic activity in the country. A downturn in which businesses lose an unprecedented amount of money, eventually resulting in a decline in industrial products as well. For common, everyday people like us, the recession has different dimensions for us. A recession period means higher unemployment rates, stagnant wages, and a steep downturn in investments of various natures.
The stock market plummeting that we observed in February and March indicated a global recession. It was validated by leading economic observatory agencies in the world. This is why we think that preparing for a recession in 2020 is critical!
Preparing for recession
Now, let us focus on ways through which you can survive this period of economic decline.
1- Creating a financial plan
Put simply, a financial plan is a roadmap to achieve your financial goals. The nature of these goals can vary of course. Different people have different goals. Your goal might be paying off debt, buying a new house, or renovating one that you have, making sure your kid’s college fees are paid, and so on. The subjective nature does not matter. The important thing is that you must have a template to follow for making a financial plan. You can search for such templates online and pick the one, which suits you the best.
2- Making modifications in living style
Living simply might sound unpleasant to some. However, living within your means is not as bad as it sounds. There are many benefits associated with a simple lifestyle. These are financial, environmental, and mental nature. If a recession hits you, you will eventually have to make some modifications to your lifestyle. Hence, you need to be mentally prepared for that. There are many alterations that you will have to make. To prepare for a recession in 2020 include dinning more at home, shopping less, and missing certain vacation ventures that you had in your mind!
3- Say goodbye to lavishness
There are certain luxuries, which you can still live without. Until the financial status improves, you might want to say goodbye to these. Surely, you do not need expensive gym memberships when people are struggling for bread in this world. Apart from that, certain services like telecommunication and power also need a revisit. See if you can save yourself some bucks there! Oh, and we think it is about you stop Netflix and chilling!
4- Saving cash is important
You must have a minimum of at least one thousand American dollars in your account, in the form of cash. We wish we could emphasize strongly enough, the importance of cash in your bank. It is only then that you can make investments in new business.
5- Invest in bonds
It sounds ridiculous to some, but the idea of investing in bonds is quite a safe option. The reason why people refrain from investing in bonds is that this kind of investment does not give you high returns. However, there is more money in this trade then you think. Nevertheless, to prepare for a recession in 2020, caution must be exercised when it comes to dealing with bonds. Some people tend to shift all their assets into bonds. What are they, wolves of Wall Street?
A recession is a period of decreased economic activity. Fewer bucks are spent on stuff than normal, which can be quite depressing at times. However, you must follow the tips we have outlined for you in this discussion. We are positive that if you do follow these tips, you will be able to survive this period of economic depression!