While policymakers continue to debate whether or not the U.S. economy is in a recession, all recently updated economic indicators suggest the United States is heading in that direction sometime in 2023. After 11 years of an economic growth period for the U.S., the now slowing growth following the pandemic is affecting the economy. Preparing for a recession is never a fun topic to be discussing, but better for one to be prepared and not need to implement any plan B. Now is the opportune time to prepare for a better financial position as we enter a new year.
No matter when a recession is “officially” declared the economic weakness happening today will continue and will be excepted for the years to come. While recessions are inevitable and unpredictable, there are ways one can be better prepared. One thing we know for sure, the era of low-interest rates, low inflation, and easy money is long gone! While you can’t control what happens to the economy, you can take steps to better prepare for your short and long-term financial future. Btw, Do you know that more millionaires are born during a recession? (Ah, a topic for a different post!)
2022’s Story of Inflation
Initially, inflation proved to be resilient and consumer spending soared earlier this year across various industry categories. That happens when you have millions of people locked up for months (across the globe) and then everyone comes back into the world. Of course, consumer spending ramped up. However, that attitude has definitely cooled as consumer spending has now declined for consecutive quarters.
In a recent survey of U.S adults done this fall, it highlighted that 84% of American consumers have increased concerns about inflation heading into the new year. The most cited financial change being made is by delaying big purchases and making lifestyle changes in order to prepare for a recession. The second most cited, having emergency savings in case of job loss.
Preparing For a Recession
There are always ways to plan your budget for any economic changes, and preparing for a recession is no different. It all begins with knowing where you spend your money. Creating a spending plan, starting/staying on budget, and paying bills strategically. Build up on your savings. Look for ways to make extra money and pay off high-interest debt. Improve your credit score. It’s time to double down on good money/credit habits. Most importantly build that emergency fund!
More millionaires are made in a recession than at any other time, did you know that? Sure, it’s not easy to do when all you hear is about falling stock prices but trust that long-term investments pay off. For more on How to Invest During a Recession HERE is a great article from Forbes.
As we sit days away from the start of the new year, ask yourself.
What can you do to put yourself in a stronger financial position?
Appreciate you reading until the end,
Until Next time,