Episode 114: How to Prepare For a Recession: 15 Practical Recession Planning Tips

How to prepare for a recession or how to prepare for an economic collapse.

Feeling anxious about a recession? Between high gas prices, soaring inflation, a plummeting market, and food shortages, a lot is happening in the world now. On top of that, lately, there’s been serious talks of a recession. Whether you’re Gen Z and this will be your first recession, or you’re older and have experienced a few, today we’re chatting about how to prepare for a recession.

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Hey there financially savvy travelers and welcome back to another episode of The Thought Card Podcast between high gas prices roaring inflation, plummeting market food shortages and wars. There's a lot happening in the world right now. However lately there's been a lot of talk of a recession whether you're gen z and this will be your first recession or you're older and have experienced a few. Today. We're chatting about how to prepare for a recession, recover some basics like what is a recession? How long do recessions last are we in a recession right now? Plus ways to financially prepare for one.

Welcome to the Thought Card, a podcast about travel and money where planning, saving and creativity leads to hoarding travel, building wealth and paying off debt. We are financially savvy travelers.

Here's the thing, recessions are common, they are inevitable and while scary throughout our lives will likely experience a few economists defined recessions as two or more back to back quarters of economic decline. So that's six months of decline in economic activity. Or more broadly as the N. B. E. R. Defines it. A recession is a significant decline in economic activity. The N. B. E. R. Or National Bureau of Economic Research is recognized as the authority that defines the starting and ending dates of US recessions On average. A recession happens every six years and typically last 10 months. So let's run down three of the latest recessions. The COVID-19 recession is the most recent recession which began in February 2020 and lasted only two months, making it the shortest US recession in history The Great Recession from December 2007 to June 2009 lasted 18 months And then the Dot com recession lasted eight months from March 2001 to November 2001.

Some of the major causes of a recession include high interest rates, slower production of goods, less consumer demand, high unemployment rates, massive layoffs, making it harder to find a job high for closure rates on homes and high inflation. The rise in prices. So what you may be wondering is a recession coming in 2023? Well experts say a recession will likely happen in 2023 or 2024. But we're going to have to wait and see most of us panic when we hear a recession is looming because of all the uncertainty. Will we lose our jobs? Will we be able to keep up with the mortgage? If we lose our jobs? Will we have to move back in with our parents? Will our parents or siblings have to move in with us? Does going on vacation or making that big purchase make sense right now to prepare for a recession? I think the best thing we can do is think about these. What if scenarios and come up with a game plan for what would happen if this happened in real life. But one thing to remember is that recessions affect people differently. Some people struggle during a recession while other people thrive during a recession, you're listening to this episode because you're probably thinking about the effects a recession would have on your life. So let's jump in and talk about some things we can do to prepare financially for a recession, increasing your savings rate is at the top of my personal list. I'm focusing on building my emergency savings fund and that is becoming a priority for just in case things get a little hard or a little harder. I'll be that much more prepared if you haven't already considered saving three months of living expenses and then six months and then nine months and then 12 months reward yourself for reaching each milestone. So if you're bumping up your emergency savings from six months to nine months after you reach your milestone of nine months, reward yourself. Do something nice to celebrate all the hard work because let's be honest, saving is hard work, saving is hard work. Something else that you can do is pause making extra mortgage payments. This is another thing that I'm most likely going to be doing if we do officially hit a recession. Making extra mortgage payments is a luxury. But what I could be doing now is reallocating those savings to paying off any debt and boosting our savings. So pausing extra payments on any debt you have maybe something that you can do as you prepare for the recession, if you have high interest debt like credit cards now may be a good time to pay them off so that you're not carrying around extra bills during a recession. Another thing to prepare is stocking up on supplies so that may include non perishable goods like canned foods, toilet paper, tissues, cleaning supplies, etcetera. Just being ready, make sure your household is ready. I really like this tip. One thing that my mother in law has picked up is coupon ng and I think coupon ng could be a great strategy for preparing for financial downturns. You can coupon to save money on groceries and use coupon websites, coupon apps, newspapers, product packaging and use those to save money across the board because if you can save just $10 a week while grocery shopping, that's $520 a year. I have so many things I could do at $500 right now. Another idea is to getting on payment plans in particular for hospital bills. So as you all know, I recently had a baby a couple of months ago, well honestly almost a year ago and that hospital bill came and let me tell you those zeros are scary, okay, it's a lot of zeros and we just weren't prepared to just drop the bag. So we decided to opt in for a payment plan and our hospital does not provide any interest, there's no interest on this payment plan. So we just kind of slow and steady are building up to pay that off. So getting on a payment plan may make a lot of sense, especially if there's no interest or low interest so that you can kind of tackle it but in small chunks versus just wiping out all of your savings, that could be an option for you as well. Now as you know, this is a personal finance and travel podcast of course going to have some travel ideas here, but using your points and miles when traveling instead of your cash right now could make a lot of sense and I highly recommend listening back to episode 79 with Julia Menez from Gebreeze Travel Podcast for advanced travel hacking tips like how to get free hotel upgrades using surveys and secret hotel passwords that unlocked free goodies. So this is the time to use your points and miles use them do not lose them. Another idea prepare for the recession is to delay home improvement projects. Of course if there's something urgent like something breaks, of course you want to take care of that. But I'm talking about like renovations or things to enhance your home. Those maybe can wait a little longer. I highly recommend listening to episode 104 for my take on the three bank accounts every homeowner should have including your home renovation fund. Now I've talked about this before on the podcast but met opposed to house hacking by getting roommates. Hey sometimes you're in a position where you have the space in your home and you can share that space and use that fund to take care of bills or to pay off your mortgage or your rent. House hacking is something that you can consider. So getting roommates is definitely on the list and not be desirable, but it's on the list Now, if you are into investing, preparing for a recession now may be a good time to buy stocks at a lower price point. So the market is fluctuating right now, but if it's dipping could be a good time to purchase more shares at a discount. Another idea is gardening and we talked about this a couple of episodes ago when I visited the wild center. But gardening in terms of starting a garden or even expanding your garden could be a way for you to start to grow your own food, whether that's herbs or vegetables or fruits. It's definitely something that I am considering and working on. So that can also help you prepare and reduce expenses overall. I think not taking on any new debt or any new unplanned large expenses would be wise and that includes vacations. So not to say that you never go on vacation or never planned for trips, but actually planning the trips like saving for budgeting for it versus just kind of going on a whim and that could really be helpful during these times right now. So not taking on a new debt and planning for large expenses. Those are helpful, especially during times of uncertainty. Very, very popular is selling items you no longer use facebook marketplace is very popular. There are plenty of other websites where you can sell your used goods that can help bring in some extra cash if you are on the job market or you're interested in getting a new job or finding a job or climbing the career ladder, then updating your resume. And also your linkedin profile are good moves as you prepare for a recession and me as an entrepreneur, I don't necessarily use my resume as often, but I'm definitely keeping my linkedin profile up to date with the latest and greatest things I'm working on because you just never know who's hiring. Also with that being said, learning new skills when you're planning for a recession or within a recession, I think there's a lot of opportunity to kind of like hunker down and fill in some of the knowledge gaps that we have. So if you're like me, you have a ton of old courses that you've purchased that are just living in your inbox. So go through all those courses, see what's relevant and see what you could be working on and perfecting and skills that you can be building during this time and then lastly but not least of course I know during recession, especially during the last recession that we had the great recession, a lot of people chose to say, you know what I can't find a job right now. So I'd rather just be productive by going back to school and pursuing a higher education degree, like a Master's degree or certification, so that could be an option as well.

So overall we talked about a lot of different ideas in terms of planning for recession, some things including making more money, some things including reducing expenses, but overall I hope you found something that you can grasp and something that you can implement and like I mentioned, I know thoughts of recession is scary. This will probably be my, let's see, technically, probably my third recession and it still doesn't feel like I know what to expect right because I've been in different places in my life during all three during the pandemic during the great recession and if there is a recession coming down the pike, who knows where we're going to be. So I know there's a lot of uncertainty but I think thinking ahead and talking through and brainstorming those, what if scenarios can really help us to kind of feel a little bit more at ease. So if you enjoyed this episode and it gave you ideas on how to survive and thrive during a recession, please take a moment to leave me a rating and a review on Apple podcast or Spotify, this is a free way to support this podcast while also ensuring that more financially savvy travelers all across the globe, find the thought card podcast. Now I definitely want to hear from you. Sound off in the comments on my website, over at dot car dot com and tell me how you are planning to prepare for a recession. Alright, now that is all for this episode and I will see you again in the next one. Bye.

I hope you enjoyed this episode. But don't forget there's way more where that came from. When you become a supporter of the show, you'll get bonus episodes, additional tips on affording travel real time updates, as well as strategies for building wealth and creating multiple income strings head over to dot com forward slash join to support. Also be sure to follow me on instagram. I'm at the Danielle desire slide in my DM and share with me your thoughts about this episode. What did you enjoy what stood out to you? Let me know. I'd absolutely love to connect with you outside of the podcast. See you in the next one.

What is a Recession?

Recessions are inevitable, and while scary, we’ll likely experience a few throughout our lives.

Economists define recessions as (2) or more back-to-back quarters of economic decline.

Or, more broadly, as the NBER defines it, a recession is a “significant decline in economic activity.”

The NBER, or National Bureau of Economic Research, is recognized as the authority that defines U.S. recessions’ starting and ending dates.

In this episode, we cover the following:

  • What is a recession? 
  • How long do recessions last?
  • Are we in a recession? 
  • Ways to financially prepare for a recession.
  • Recession tips to save more and earn more money.

Watch the episode here:

How long do recessions last?

On average, a recession happens every six years and typically lasts ten months. 

Let’s run down (3) of the latest recessions. 

1. The Covid-19 Recession is the most recent recession, which began in February 2020 and lasted only two months, making it the shortest U.S. recession in history.

2. The Great Recession from December 2007 to June 2009 lasted 18 months. 

3. The Dot Com Recession lasted eight months, from March 2001 to November 2001.

Common causes of a recession

Wondering what happens during a recession? Here are the leading causes of a recession.

  • High-interest rates
  • Slower production of goods 
  • Less consumer demand 
  • High unemployment
    • Massive layoffs
    • It becomes harder to find a job 
  • High foreclosure rates
  • High inflation

So, is a recession coming in 2023? 

Experts say a recession will likely happen in 2023 or 2024, but we will have to wait and see. 

How To Surve a Recession

Most of us panic when we hear a recession is looming because of uncertainty. To prepare for a recession, the best thing we can do is think about “what if” scenarios and devise a “just in case” game plan.

Increasing your savings rate

As I prep for a recession, I’m focusing on building my emergency savings fund.

If you haven’t already, save three months of living expenses, or six months, or nine months.

Remember to reward yourself for reaching each milestone. Do something nice to celebrate all your hard work.

Saving is hard work!

Pause making extra mortgage payments

For many people, making extra mortgage payments is a luxury.

Consider reallocating funds to boost your savings.

Pay off high-interest debt

As you prepare for a recession, if you have high-interest debt, like credit cards, now may be a good time to pay them off so you’re not carrying extra bills during a recession.

Stock up on supplies

Consumer staples may become hard to find or more expensive.

Gather supplies like canned foods, toilet paper, tissues, cleaning supplies, etc.

Couponing

Couponing could be a great strategy when preparing for an economic downturn.

Use coupon websites, apps, newspapers, and product packaging to save.

Some of my favorite couponing or cashback websites include:

  • Rakuten – Get cashback and save on online purchases.
  • Ibotta – Check Ibotta before you shop in-store or online, and get rewarded with cashback on everything from groceries to your favorite tech gadgets.

Enroll in payment plans

Another idea is getting on payment plans with no interest, particularly for hospital bills.

Slowly pay off your no-interest debt.

Use points and miles

Use points and miles when traveling instead of cash.

Listen to Episode 79 with Julia Menez from Geobreeze Travel Podcast for advanced travel hacking tips like how to get free hotel upgrades using surveys.

Next, here’s a list of my favorite credit cards for earning travel rewards.

Delay home improvements

Of course, if there’s something urgent, you want to take care of that.

But renovations and enhancements can wait a little longer.

I highly recommend listening to Episode 104 for my take on the three bank accounts every homeowner needs, including a home renovation fund.

Buy stocks at a discount

Now may be a good time to buy stocks at a lower price point.

Listen Next: How To Pick Good Companies To Invest In – Episode 98

In this video, Kevin L. Matthews II shares tips for investing even when the stock market is down.

Get roommates

If you have extra space in your home, house hacking can boost your income while reducing household expenses.

No large unplanned expenses

Avoid taking on new debt or large unplanned expenses like spontaneous trips.

Read Next: How To Save For Big Purchases

Gardening: Start or expand

Grow your food, whether that’s herbs, vegetables, or fruits.

Sell items you no longer use

Sell items you no longer use on Facebook Marketplace.

There are plenty of other websites where you can sell your used goods for cash like books, clothes, and phones.

Learn new skills

During economic downturns, fill in knowledge gaps by learning new skills.

So, if you’re like me and have a bunch of old courses sitting in your inbox, go through them, and see what’s relevant and which skills you can build upon.

Some courses worth checking out include Trade & Travel for investing in the stock market as a day trader and Launch Your Side Hustle.

Update resume

If you are interested in finding a new job or side hustle, update your resume and LinkedIn profile.

You never know who’s hiring or looking for your services!

Pursue higher education

Lastly, during a recession, many people go back to school and pursue a higher education degree, like a Master’s degree or certification.

Other Episodes You’ll Enjoy

Financial Literacy Basics – Episode 113

How to Achieve Financial Freedom With Jamila Souffrant – Millennial Wealth Builders Series

 

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