Recession Survival Kit

Information is not investment advice.

Have you heard of foreboding? Open your vocabulary notebook and put it down. You probably already know the meaning or will definitely need it soon. It is a torturing feeling that something evil will happen, a premonition that casts dread over the future. The worst part, you don’t know precisely when “apocalypse” will strike!

Day after day, global news and the most influential analytical agencies warn us about the upcoming financial crisis. Some predict that it is imminent; others soften the situation and give hope that it won’t be so devastating. Nonetheless, we, who follow the global events, are not at ease and get up in the morning with anxiety and foreboding that gives us chills.

Don’t let fear control you! The more information you have, the less dramatic the inevitable prospect will seem.

Recession, Nice to Meet You

Simply put, a recession is a result of a series of unfavorable economic conditions that lead to unemployment, stagnant wages, hyperinflation, high bankruptcy rates, drop down in retail sales, increase in crime, and even a rise in death rates provoked by depression and debt. Most of the times, financial fluctuations can pass undetected by common people. Unless the situation is so tense that an economic collapse can cause a ripple effect the falling domino piece of which can reach any household.

As proved by the crisis of 2008, the catastrophe may be sudden, and the speed at which it evolves – drastic. So, not to stay high and dry before you know it, learn to detect the signs that point at the beginning of a worldwide downturn.

If all of the following are real, face reality – financial doomsday is knocking on your front door.

1. Governmental debt is growing

To boost the economy and invest in the future, the government sometimes asks creditors for extra money. The bigger the debt is, the more likely a budget deficit to happen. For example, now the US government debt is immense. The troubling part is that to pay back, they borrow more. It can turn out to be catastrophic because, at some point, investors may lose trust and ask for their funds back with higher interest.

2. Consumers spend less

When people get less confident about the future, they start saving and cut on their “pleasure” spending. This behavior slows down the economy. It can be a red flag for a country the national debt of which is growing.

3. Inverted yield curve appears

This indicator has a history of preceding all previous recessions. Now when it appeared again, the experts are becoming less and less optimistic about avoiding a financial crisis. For instance, long-term US interest rates are now below short-term rates. It means that investors predict interest rates to fall even more in the future.

4. Unemployment rises rapidly

People not only lose jobs but quit less. When the economy is stable employees feel more confident and seek better work conditions. However, in the pre-recession times, individuals retain their positions in fear they won’t find any decent options. Companies stop hiring temporary workers, and manufacturing activity is shrinking.

5. Political environment becomes too toxic

The countries with the most infamous leaders and unstable economy attract fewer investors. The latter like the government to keep to the promises and provide a stable environment for their money. If they don’t see it work the way they planned, they might panic and sell. If it is not an isolated incident, it can lead to massive sell-off that can be drastic for the global economy.

All things considered, you should ready yourselves, my brave, optimistic warriors!

Financial Hacks for Survivalists

Well-well, the financial crisis is not exactly a nice weekend getaway but rather a route march in the unknown destination with limited supplies. So, we have to be prepared for the worst while hoping for the best!  Here are the tips that can make up a sufficient survival kit for facing the recession in the smoothest way possible.

Brush-Up your Economics

Knowledge is king! With a general understanding of the fundamental economic, political, and financial principles, you will start seeing a big picture, learn how to predict specific events, and be ready for them at least morally.

You can now start following global news to track country events, currency, and market fluctuations. Since the FX market is usually an indicator of the investors’ behavior and overall world situation, you may want to learn the basics of the fundamental analysis. It will help you to understand how economic events and trading currencies are interconnected.

Keep a Piggy Bank

Having an emergency fund is a good idea in all times and especially now when the financial market is turbulent and tomorrow is uncertain. Experts advise saving at least four months’ worth of monthly expenses to keep you afloat if something unexpected like bankruptcy or unemployment hit your family. Freelancers and small business owners should be even more precautious and save two times as much money as people with permanent employment contracts.

Be Ready to Withdraw

In case of the financial tsunami, make sure that you can always access your cash as fast as possible. It means that the withdrawal of your funds should take not more than a week if required. Remember, when there is danger in the air, nothing is more calming than cash. Stash some decent amount of it for an emergency when you aren't able to withdraw!

Search for Alternative Job Opportunities

Granted that you an unlucky one to lose your job, the crucial is that you keep your spirits up! Even if you didn’t plan a new beginning, the time to break through your comfort zone might be now. Do not take this devastating event as a failure or the end of the world. It may as well become the biggest challenge and opportunity to change your life. Who knows, maybe without this push you would have never had guts for something bigger. 

Now that you took an anxiety pill let’s talk business. Your former qualification will always stay with you, and in more favorable circumstances you can come back to what you are good at. However, now, it is your chance to be creative and find other sources of income.

For instance, try the work that will always be in-demand. People need food, clothes, transportation, repairs, household goods, haircuts, and many other essentials if you think about it. So, stay observant and learn to provide the things people need badly.

Again, trading in financial markets can be not the worst option during unsettled times. Learn the basics that will help you to navigate in the complex world of finances. Invest in precious metals to protect your funds during the recession. Besides, money is always safe if kept in real estate or land.

Scrimp and Save

When I speak about reducing expenses, I mean not saving for a rainy day, but surviving during it! By and large, you can start doing it easier than you think. But do not rush into extreme saving because it may lower your quality of life which can be frustrating. And this is the least feeling you need during the recession.

Save wisely. Day by day, minimize things that are not crucial for living. Learn to be less dependent on sales, credit cards, takeaways, and dinners out. If these things are already off your plate, reconsider the eating habits. Buy simple, nutritious products, and improve cooking skills. It can be both rewarding and fun! Moreover, you can try gardening. Organic food is of top popularity now, so why not grow own perfect tomatoes or beetroot?!

Transportation can be costly. If there is a possibility to go on foot or by bike, do not hesitate to take it. Whenever you feel bored without a tight leisure schedule, find out how many free events happen. I am sure you’ll enjoy them!

Back to Reality

The possible financial crisis is not doomsday. Economic downfalls tend to happen once in a while in the course of history.  So, do not get overwhelmed with post-apocalyptical behavior. If you manage to keep a cool head and a sane spirit, this financial challenge won’t destroy you. We advise you to consider the recession as a pool for new opportunities, unusual knowledge, and big hopes. See you soon in my packed with goods bunker.