What have we learned from the 2020 Covid-19 Recession that we are currently rebuilding from?
Below are a wrap-up and synopsis from various financial and economic professionals. The average recession lasts 11 months, with an average of 5-6 years between them. While not all of the strategies work together, use the best combination that suits your own lifestyle.
- Start a rainy-day investment fund. Even with the smallest amounts, put away on a regular basis, can build so that you have a backup emergency fund. If no emergency, it can build into a more stable retirement fund.
- Learn to budget. Track and examine your income and expenses for yourself and your family. Consider the budget balance that includes money left over each month.
- Avoid being stretched too thin. Pay attention to your credit scores, and how to improve them. Do not live a lifestyle where you live paycheck to paycheck, supplemented by credit cards or high ratio mortgages. Small problems become amplified it you cannot afford a one-time incident like a car or home repairs.
- Avoid high debt loans, high-interest credit cards, or payday loans. Interest rates and fees can eat up your money more than your purchase might be worth it. Pay down higher-interest debt before you start with lower-yielding investments.
- Learn some more updated, marketable skills to add value to your present or future employers. Become a more valuable employee, which may help avoid layoffs.
- Create multiple incomes. Not only will the extra income help, but losing one source of income will not affect you as much as losing your only source of income.
- Understand your retirement and pension options, learn how to invest to create your nest egg with the powers of compound interest. With advanced skills, learn to handle your own investments, saving fees.
- Keep your plans and options flexible, and keep your options updated. Long term plans can easily be changed by market disruptions. Identify and manage within your risk tolerance.
- Reduce spending on discretionary items. Learn to plan and budget a more frugal lifestyle.
- Build your professional network. Seek Professionals who can help you with your work and financial goals – Financial Planners, Tax Accountants, Realtors, Employment Recruiters, Lawyers, Insurance Agents, etc. Even your current competitors. They can all help you survive the next recession, not only with financial success but also avoiding hazards and pitfalls of a recession.