4 Steps to Recession Proofing your Finances

Times like these remind us that no matter where you find yourselves in life, you are going to be affected by a downturn in the Economy. Taking steps to Fireproof your personal finances can be a life saver these days.

1. Clean up your Budgets!

This is the equivalent of a company cleaning up its balance sheets. Anytime any one (the government, investors, lenders) wants to see the true quality of a company, they go to the balance sheet.

This applies in personal finance as well. By making sure your debt and equity are in Balance, you can keep yourself solid for the hard times.

Start this process by eliminating debt. Dave Ramsey advises the Debt Snowball method that you can read more about in his book, Total Money Makeover. Think of it this way: If you were entering into this recession with no expenses except your basic utilities, wouldn’t you be seeing it in a different light? That’s why its important.

2. Build up your Savings

Now consider approaching this recession with no expenses but utilities, and enough money in the bank to cover all of your expenses for the next year. You would definitely be approaching this recession differently.

Most Financial analysts advise you to save 10% of your income; As a college student, you may want to save a little more. I’m saving 30% right now, and I’d love to be able to put away more.

3. Get a Job and Keep it

Don’t have a job? Make sure that if recession seems on the horizon, Get one.

Have a job? Excellent!

Keep it.

That’s very simple, but there’s a more important step here.
The “Keep it” part isn’t always so easy. Especially in a downsizing, recession atmosphere.

So make yourself necessary. When your company realizes it needs to cut costs-employees will be quick to be downsized. By making sure that you are important to the company, you lower your chances of being one of those downsizes immensely.

If you’re not working on an important project right now, get signed up for one.

If you can’t get signed up on one, volunteer.

What’s an important project? When a company looks to downsize; they look at people as profit generators or expenses. Be sure that you are signing on to something that makes you a profit generator.

4. Invest through the bad

The whole mentality of the stock market: Buy Low, Sell High.

So I never understood people’s mentality when we dip into a recession and no one buys?

When you know its a low in the market, why wouldn’t you buy?! Make sure, that no matter how ugly everything’s looking, that you find the solid companies out there and continue your regular investing. By doing so, you’re going to virtually guarantee a sizable return at the the following boom.

Recessions, though difficult, can be an outstanding tool if used correctly.

They aren’t fun for the majority of people; but its a Dog-eat-Dog world, and in Capitalism, someone will come out on top. Take the steps to be sure that its you.

How are you Surviving the Recession?

What steps are you taking to recession proof your finances? Do you practice anything that makes you more secure in times such as these where things aren’t looking so hot?

What are you doing now that you can carry over into the good times to improve your personal finances?