With GDP declining at an annual rate of 1.4% in the first quarter of 2022 announced today, we are likely to enter a recession in the near future, so you should consider these 5 things you can do to prepare if the US falls into a recession.
It is said that there is a recession when, in the economy of a country, there are at least two consecutive quarters of GDP decline after a period of growth.
With GDP declining at an annual rate of 1.4% in the first quarter of 2022 released today, we are likely to enter a recession in the near future, so you should take some steps to protect yourself in these uncertain times.
Here are five things you could do:
Discover: 5 things you can do to prepare if the US falls into a recession
1. Create an emergency fund
Saving for an emergency fund is essential in this time of uncertainty. It is recommended that you have six months of your expenses saved, and although this may seem like a large sum, the truth is that you could reach it by making small contributions.
Just make sure you save each month in a savings account. Over time, you will develop the habit of saving. Remember that you can automate this contribution with your bank.
2. Decrease your expenses
If you are looking to have more cash available, then you should review in your monthly expenses what services or products you can stop consuming and which are essential.
Focus on these products or services that are not as necessary and eliminate them to spend that money on other more important things. Remember that experts generally recommend not spending more than 30% of your income on these types of products.
3. Invest in your career
You can protect yourself from a recession by investing in further education. And it is that, during recessions, the unemployment rate for those with a bachelor’s degree or higher is much lower than for those with a high school education or less.
About 2% of workers with a bachelor’s degree or higher were unemployed last March, compared to 4% of high school graduates and 5.2% of those without a high school diploma, according to data from the Work Department.
4. Invest for the long term
In times of recession, it is common for shares in the Stock Market to fall. If you have investments here, you must remember that you do not lose anything if you do not sell. Keep in mind that the market is cyclical, so those stocks could go up, and then you can sell high.
In fact, there are many people who buy when the market is down. Just remember that with investments, you might be better off thinking long-term, as recommended by Investopedia.
5. Increase your income
Another way to protect yourself in times of recession is to look for other ways to increase your income. For this, you can get an extra job, or you can also ask your current job to give you more responsibilities accompanied by a salary increase.
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