Wherever you live in the world, the global pandemic will have affected you. Even if you haven’t fallen ill yourself or lost a loved one, you may have lost your job or had your income reduced due to lockdown measures.
Uncertain times cause worry and anxiety. And now the financial experts are unanimous in telling us to prepare for a recession, that will probably be as bad as the recession of 2008 and may even be as severe as the Great Depression.
Perhaps you’re wondering how to prepare for an economic collapse? How can you protect your household from the worst effects of a global crash? Read on to learn more.
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The Impact of Recession
Recessions happen when economic activity declines and a country’s GDP reduces for two or more consecutive quarters. Often this results in job losses.
Losing your job is a financial disaster for most people. Even if you keep your job, you may find your hours reduced or your wages stagnating in the face of inflation. This can make it hard to keep up with day-to-day living costs.
How to Prepare for an Economic Collapse
The global economy and all the things which affect it are outside of our direct control. But there are some measures individuals can take in preparing for financial problems.
Get Your House In Order
Make sure that you are in control of your monthly outgoings. Consider stopping any luxuries like subscription TV services. See if you can get cheaper deals on cell phones, broadband, and energy services.
Reduce your discretionary spend as much as possible. Pay attention to your grocery bills. Bulk buying or batch cooking could save you money. Consider cutting out take-outs.
You need to build up an emergency fund to help you through any major financial crisis. Work out how much you would need to survive for three months without income, and try to accrue that amount in savings.
Earn Some Extra Money
Having some cash stashed away will help to shore up your finances in the case of a dramatic reduction in income. See what you can sell that you no longer need, or where you can earn some extra money. Options include pet sitting, babysitting, or even online surveys.
You could even see if you can turn a hobby into a business. If it’s successful, it might even become a new career. Or alternatively, you could think about retaining, to make it easier to find a new job if you become unemployed.
Review Your Debts
If you have credit card debt, it makes sense to search for the best deal to ensure you’re paying as little interest as possible. It might even be a wise choice to consider taking out a personal loan to consolidate your debt.
It may seem counterintuitive to take out a loan to prepare for financial difficulties. However, taking out one loan to pay off higher-interest debt can significantly reduce your financial outgoings and help you to clear your debt more quickly.
How to Prepare for the Next Financial Crisis
It’s impossible to foretell how bad this next recession will be. It’s hard to know even if you’re an expert economist, so most ordinary people won’t be able to predict the future.
If you’re were concerned about how to prepare for an economic collapse, then this article has given you some practical ideas to focus your efforts. Make sure you explore the rest of the blog for some more great finance tips and advice.
