It is said that there is a recession when in the economy of a country there are at least two consecutive quarters of decrease in GDP after a period of growth.
With the decrease in GDP at a 1.4% annual rate in the first quarter of 2022 released today, we are likely to enter a recession in the near future, so you should take some actions to protect yourself in these uncertain times.
Here are five things you could do:
1–Create an emergency fund
Saving to have an emergency fund is essential in this time of uncertainty. It is recommended that you have six months of your expenses saved, and although this may seem like a large sum, the truth is that you could reach it by making small contributions.
Just make sure to save each month in one savings account. Over time, you will develop the habit of saving. Remember that you can automate this contribution with your bank.
2–Decrease your expenses
If you are looking to have more cash available, then you should review in your monthly expenses what services or products you can stop consuming and which are essential.
Focus in these products or services that are not so necessary and eliminate them to have that money in other more important things. Remember that experts generally recommend not spending more than 30% of your income on this type of product.
3-Invest in your career
You can protect yourself from a recession by investing in further education. And it is that, during recessions, the unemployment rate for those with a bachelor’s degree or higher is much lower than for those with a high school education or less.
About 2% of Workers with a bachelor’s degree or higher were unemployed last March, compared to 4% of high school graduates and 5.2% of those without a high school diploma, according to data from the Department of Labor.
4 –Invest for the long term
In times of recession it is common for shares on the stock market to fall. If you have investments here, you must remember that you do not lose anything if you do not sell. Keep in mind that the market is cyclical, so those stocks could go up and then you can sell high.
In fact, there are many people who buy when the market is low. Just remember that with investments, you might be better off thinking long-term, as recommended by Investopedia.
5–Increase your income
Another way to protect yourself in times of recession is to look for other ways to increase your income. For this, you can get an extra job or you can also ask your current job to give you more responsibilities accompanied by a salary increase.
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