The recession is coming, here is how to prepare for your financial safety.
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Today I wanted to discuss what we should do, and what we shouldn’t do in the context of money – right now, considering there is a real chance that we’re about to enter an economic recession.
Recently I got news that my parents were laid off along with everyone else in my immediate family. If you were laid off the first thing you need to do is set up your unemployment benefits.
Once you’ve set up some passive income if you don’t have a job, here are 5 things to avoid doing with your money and investing right now.
#1 Do not move your money from your bank account into a mattress. Don’t cash out your money and put it somewhere, it’s not going to help. In fact, it’s going to put your money in a more risky situation if something happens to your house. Your bank should be FDIC insured which means even if it goes under, which most likely it will not, your money will still be insured up to the legal limit of $250,000 and you’ll be fine.
#2 Do not sell your investments and do not touch your retirement accounts. At the end of the day, the stock market can recover just as quickly as it fell and no one knows or can predict the stock market bottom when investing.
#3 if you need money for the next 3 to 6 months like my parents, do NOT INVEST, pause contributing to any retirement accounts, unless you have enough to cover for your expenses because it’s likely the market will continue to fall as the layoffs get worse. Be careful contributing to your retirement account (beyond employer contribution matching) only to realize that money could have been useful to pay your bills because you just got laid off. It may not make sense to withdraw your money because it lost a significant portion of it’s value so hope for the best, plan for the worst.
#4 Avoid scams. There is an influx of people posing as the CDC, the IRS, or people promising to have new investment opportunities ajljljnd while you’re staying home, you will receive suspicious looking emails asking you for money, your login details, and you want to use caution and be extremely careful.
Here is what you do want do with your money:
#1 Build an emergency fund. Hopefully after watching my channel you already have one but if not, NOW is the time to build one. You need 3 – 6 months of cash stock piled to pay your monthly necessities. 6 – 9 months if you want to be conservative. You can do this by reducing your expenses and cutting out unnecessary spending.
You can also do this by selling off unnecessary goods and luxury items you may have that you’re not using. You can also do this by taking on side hustles like driving Uber, Uber Eats, postmates, task rabbit, and my personal favorite, Airbnb. If you’re out of a job, your time is crucial, don’t treat it like an extended vacation. Don’t take on extra debt.
#2 While you’re doing the above, track each dollar with apps like Mint, or Personal Capital to see where your money is going then ask yourself if you can cover your debts for the next few months if you don’t have a job. If you cannot, it’s important to call your banks and credit cards and ask them about any relief programs you can take advantage of. In the case of real estate and your house, if there is nothing available, the last resort is to ask for “forbearance”.
Here are links and resources to help you get through these tough times.
Unemployment Resources by State:
Tax Payment Extended Until July:
Forgiveness from Credit Cards and Banks: https://www.bankrate.com/finance/credit-cards/issuer-assistance-programs-amid-coronavirus-fears/
Non profit financial counseling: www.nfcc.org
*Links above include affiliate commission or referrals. I’m part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.