By Russ Gaiser III
As of late, there has been a lot of discussion and discussion about the economy and how likely it is that we might face a recession in the not-so-distant future. It may be difficult to let panic set in. Let''s look at the possibility of a recession being near, and more importantly, what you can do to prepare for and endure an economic slowdown.
Russ Gaiser III
When there is a decline in the United States GDP for two consecutive months (a 6-month period) then, economics determine that the country is in a recession, but that does not necessarily mean GDP will decline again. It isn''t a matter of whether or not, but when we will face a recession. All we can do is to have our financial house in order and understand how to be prepared as soon as possible to handle the storm.
When we enter a recession, how long will it last? Well, we have had some long recessions and depressions in our history, but they have only begun in 1857, according to a recent Kiplinger report. Recessions have been less severe, due to the elimination of bank failures as a result of the Federal Deposit Insurance Corporation (FDIC) and improved monetary policy by the Federal Reserve. We ultimately do not know how long the next recession will last, but we can educate ourselves.
It''s very important to focus on things that we have control of. Hence, what you can do to be prepared for a recession depends on your personal financial situation. A single parent living paycheck to paycheck will have a different route of action than a married couple with no children and steady employment. However, a good start is to look at how much of your income you are able to keep. If you have a large percentage of your income circulating through loans, credit cards, subscriptions, and other benefits, then putting
If living daily during a recession isn''t concerning you, but you know that you must consider your overall investments, remember that now is the time to keep going through your financial plan. Several aspects of this have to do with how close you are to retirement (Which is why retirement income planning is so important) but staying invested is essential so that you do not lose yourself when it comes to recessions.
Since fear is a necessity, it is advisable to seek reliable information and make a plan during favorable economic times. Ideally, it is best to anticipate early beginning of today, even if there is doubt about whether or not we will be going into a recession soon. Often, starting to prepare now will only help your situation once that time comes.
When you think or talk about looming recessions, you may be caught in a fire, especially when this conversation is constantly in the news cycle. It is important to know that recessions are a normal part of the economy and that every action you can can do to keep yourself in order. That includes understanding how you might be vulnerable during a recession (job loss, income reduction, etc.) and developing a strategy to mitigate those limitations. For most people, reducing debt (and the monthly payments that accompany that debt) and
Russ Gaiser III is a financial advisor at The Financial Guys in Buffalo, New York, where he is focused on wealth building and retirement planning. He is also a Dave Ramsey Master Financial Coach, who assists clients in improving their budgets, decreasing cash flow, and eliminating debt.
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