Public policy and worldwide events can impact your wallet! Here’s 6 important considerations to get “Recession-Proof”!
The recent increase in interest rates by the US Federal Reserve and other central banks around the world may result in a recession – or a reduction in economic activity. That’s why it’s important to have a Recession Playbook, just like it was important to have a COVID-19 Plan.
- Defense wins game! Having a defensive strategy allows you to weather a recession with less impact on your financial health. By reducing spending and increasing savings, you will have a better cushion if you lose your job or experience a reduction in hours. Also be careful about changing jobs. The Black community experiences “last hired, first fired” – even today. Seniority matters in a recession, which is another way to get “Recession-Proof”.
- Don’t count your chickens before they hatch! Recently, the Wall Street Journal noted that companies are rescinding job offers. Due to expectations of a recession, some companies are laying off workers or reducing their hiring. Until you start a new job, do not assume you have a new job.
- Cash is king! Many families increased savings during the pandemic, but are now enjoying travel, vacations, and making other large purchases that were delayed. In addition, inflation – which includes higher prices for gas, food, and housing – has increased our costs. According to Fortune, cash is king during a recession. It not only allows you to have a savings cushion, but it may also reduce your risk during a recession.
- Better health, better wealth! The COVID 19 pandemic taught us the importance of health and wellness. Many of us missed our annual physical due to the pandemic. Not good! Many of us experienced mental health challenges as we navigated the pandemic. Completely understandable! Take the time now to catch up on your health and wellbeing incase the recession impacts your access to healthcare.
- The importance of the long game! Most investors will tell you to avoid trying to buy at the bottom of the market or sell at the top to gain short term financial advantages. Instead, focus on the long game – or your long-term financial goals. Yes, mortgage rates have increased, but it still may make sense to purchase a home if you plan on living there for over 5 years. Home loan rates are still relatively low.
- Stay informed! These are challenging times, so it’s important to stay informed. There are many public policy changes beyond the Federal Reserve’s increase in interest rates that can impact your wallet, including:
- Student Debt Forgiveness: Forbes provides great information on how you can qualify for student loan forgiveness in their recent article “How to get $8.1 billion in Student Loan Forgiveness“.
- Rent Payment History Can Help Your Mortgage Application: Fannie Mae has a new program that allows rent payment history to be used to qualify you for a home loan if you are a 1st time homebuyer and pay your rent on time. Here’s a great Money article on the topic: “Paying Your Rent On Time Can Now Help You Qualify for a Mortgage“.
Yes, defense wins games…which requires planning ahead. These 6 important considerations are to get you started. Please check with a financial advisor, an attorney, family members and/or friends. And continue to focus on your OneTransaction to create generational wealth. The recent increase in interest rates by the US Federal Reserve and other central banks around the world may result in a recession – or a reduction in economic activity. That’s why it’s important to have a Recession Playbook, just like it was important to have a COVID-19 Plan.
