How should you prepare, recession or no recession - Things to do now!

A recession?is?generally?defined?as?negative?GDP?growth?in?two?consecutive?quarters,?a decline?in?overall?economic?activity?based?primarily?on?GDP?and?the?labour?market. Simply?put,?this?means?that?overall?businesses?lose?money?and?the?industry?produces?fewer products?for?two?quarters?or?six?months?in?a?row.

For?the?general?public,?this?means:

• Higher unemployment rate
• A decline in the stock market and other investment opportunities.
• Salaries and incomes don’t increase much.

As of now, recession in India seems like a contingent event, but the global economy could indeed be caught in its distress depending on how long the Russia-Ukraine war lasts. If that happens, India cannot avoid the consequences, though it might not enter into a recession.

Due to the Russia-Ukraine war, the global economy has seen a steep rise in the price of crude oil since February, 2022. This is due to the sanctions imposed on Russia, which led to the halting of exports of crude oil across the globe, which led to the rise in prices of the same. The increasing demand for crude oil, while supply being limited, directly affected the food prices in the country. Apart from that, due to China’s zero COVID lockdown policy, many manufacturing units were closed down, which?..

How?to?get?ready?for?a?recession?-?Things?to?think?about?

1. Review your spending plan every month-?

?Reducing wasteful spending and increasing your savings. avoiding EMI when buying luxury items and cutting too thin.

2. Increase the cushion of your savings to create an emergency fund-

At least 3 months of your salary/income or 6 months of your expenses should be set aside as an emergency fund.

3. Prioritize?paying?off?debt-

Verify?balances?to?make?sure?you?have?enough?money?to?pay?off?your?debt.?Make?sure?your?credit?card?bills?are?paid?in?full?and?try?not?to?accrue?any?additional?balances.

4. Delay major purchases or aggressive investments-

If a recession hits, the chances of job insecurity and irregular income flows creep in. Thus, delay purchases that can be looked at a later stage.

5.?Keep Up-skilling-

Upskill?your?knowledge?to?increase?job?stability?and?avoid?losing?your?job?due?to?short-term?hiccups.?This?will?also?aid?in?the?development?of?financial?securit.

6. Create a financial plan now-

Not having financial security can impact every part of our lives. By running regular checklists on budget, savings, and investments, making compounding work for you, and building robust financial goals, you can secure and well prepare yourself for any recession, thus, maintaining enough power to sail through tough times.

Personal?perspectives:?Mohammed?Khasim?(Professor_mo)?is?the?Senior?Manager?at Simplilearn?Pvt.?Ltd.