It would be nice to think that the most recent recession was an aberration, but the truth is that it is not. Recessions come and go; it is part of the natural economic cycle. You can always expect there to be up cycles and down cycles. This means that once you get through this recession, it is a good idea to be ready for the next one. No, you do not have to stockpile gold coins (although some small portion of gold in your portfolio is probably not a bad thing) or immediately stop spending on anything fun. But you do need to develop a good financial habits that will get you through tough times when they come.
Preparing Yourself for the Next Recession
You can prepare yourself for the next recession by keeping some of the habits you might have developed during this recession, and cultivating new habits. Here are some things you can consider to help you shore up your finances moving forward:
- Live within your means: Obviously, you need to get used to spending less than you earn, and being able to set money aside while you are about it.
- Build up emergency savings: Make sure you have built up some emergency savings that you can tap if you lose your job in the next recession, or suffer some other problem.
- Check your asset allocation: Double check your asset allocation to ensure that your portfolio is appropriately structured to meet your needs. A healthy amount of diversity is a good idea.
- Begin cultivating additional income streams: Now is a good time to begin cultivating alternative income by using web sites, or by adding dividend paying stocks to your holdings.
- Build up home food storage: You can begin, little by little, to get a food storage system going (as long as you have the room). Home food storage is a great way to prepare for the future, since you can build a rotating stock of non-perishables that can supplement your diet when times are tight.
Do not assume that once you weather this recession you are home free. There have been several recessions since the Great Depression ended, and there are likely to be several more in the future. Laying the groundwork for solid financial choices now can lead to better preparation in the future.