Are you afraid of a recession? You should be because a slowdown in the economy affects a lot of things such as employment rate, the price of goods and services and your ability to borrow money from the bank.
Since you don't know when this can happen, experts advise consumers to always have an emergency fund. While some decide to invest it in stocks and bonds, others have decided to put this in the bank. When Lehman brothers filed for bankruptcy, this made others believe that their banks could also go under so some people have decided to keep their cash under their mattress.The definition of a recession simply states that there is a negative growth for two consecutive quarters. Since this one is different from what the country has ever faced, people are advised to take drastic steps to survive the financial crisis.
One thing you have to do is to cut down on your personal expenses and only buy the essentials because no one knows when the recession will end or even if the bailout that was signed into law will work. The same goes if you have a business because monitoring your finances is the only way to make sure you are financially stable.
As a result of the slow down, more people will be put out of work and if you happen to be one of the unlucky ones, you should take this time to assess who you are and then shift to another career. Some may take the opportunity to go to graduate school because it is not enough these days to just have a graduate degree.
If you still have a job but need more money to put on the table, consider getting a second job.
You can also try scrounging around for cash by selling some old stuff or by trading in your car if what you have at home is an SUV because this vehicle consumes more gas than compact cars.
But a recession is not always bad. There is a silver lining that some of us fail to notice and you can take advantage of it.
For instance, whenever the country is in recession, the federal government announces a cut in interest rates allowing you to borrow money at a lower interest rate. You also get tax rebate from the IRS.
This is the best time to buy stocks, bonds and property if you have excess cash lying around. If you choose to go on a shopping spree, make sure that these investments will pay off in the long term so you may double or even triple what you initially shelled out.
Another benefit is that you may also get an increase in your retirement account limits.
So should you be afraid of a recession? It depends but one thing for certain is that it will affect you one way or the other regardless if the circumstances back then are different to what they are right now. Just like other things in life, there is always an upside and downside to it so don't panic. Take a step back and assess the situation because by being prepared and looking at it objectively, you will be able to survive it just like how you have done in the past.