How to Protect Yourself During Global Recession
The threat of a global recession is upon us. Analysts predict that recession would soon hit the US economy in the next 6 to 9 months. It is likely that Singapore is not going to escape the wrath of this worldwide slowdown. While minister of trade and industry, Mr. Alvin Tan has assured citizens that it is unlikely that the Singapore economy shall slip into recession or experience stagflation in the coming year, economists are taking his words with a grain of salt.
This uncertainty has left many worried about their financial stability. This article discusses a few measures that you can take to protect yourself during this difficult phase.
Re-evaluate your financial standing:
A steady financial plan is something that we should swear by throughout our lives. However, the need for such financial discipline becomes all the more indispensable at times like these. If you have not planned your finances yet, it is high time that you start doing so.
You can begin by listing down your debts including your credit cards in descending order of interest rates. Try to utilize any surplus funds to pay off high-interest loans such as credit card debts first. That way, a smaller chunk of your money goes towards the payment of interest.
It is also essential to re-evaluate your insurance needs. Do not forget to buy term insurance if you are paying off a high-value mortgage such as a housing loan. It shall be prudent not to skimp on health insurance during these troubled times.
Save now, splurge later:
It is advisable to focus more on saving any extra cash that you might have rather than spending on an extravagant lifestyle, even if you can afford it. A good way to start is by listing down all your expenses. Analyzing this list will allow you to distinguish the necessary expenses from the avoidable ones. Numerous mobile apps can help you perform this exercise in an easy convenient manner.
Hence, if you’re planning to buy that swanky car, it is better to put your plans on hold for a few months and save up the extra cash. If the recession hits you hard, paying off your loan emis with this savings would take precedence over a luxurious road trip.
Utilize your professional network:
If you have been laid off or asked to go on indefinite leave, then do not lose heart. Try to reach out to your network and look for any job openings in their organizations. At times like this, you might have to settle for job roles and compensations that are not up to your expectations. Do not shy away from taking up contractual or temporary jobs for the time being to pay the bills.
If you are thinking of making a job switch, then it is better to do it now before the final financial crisis hits. This would enable you to secure your position at your new employment and be in a stable situation when the tough time comes.
Time to upskill:
Analyze the current market scenario to ascertain the in-demand skills related to your field of experience. Try to take up new certifications and courses to upskill yourself. Revamp your resume by incorporating the skill sets that shall make you stand out in the crowd.
It is important to remember that any experience is valuable. Try to increase your exposure and gain real-world hands-on experience by enrolling yourself for internships or even unpaid work.
Earn a new degree if funds permit:
If you can afford it, now is the best time to pursue that long-awaited master's degree or diploma. That way, you shall be able to acquire a new educational qualification that shall shine bright on your resume, while also steering clear of the uncertainty of the looming recession.
You shall be job-ready by the time you pass out, and the job market shall have stabilized by then.
Boost your emergency fund:
Any person should ideally have an emergency fund that covers around 4 to 6 months of his expenses. That way, if he loses his job, he shall have a considerable buffer time to find a new source of income.
The concept of such a fund becomes extremely relevant at times like these. As per a recent survey, two third of Singaporeans do not have a fund that can sustain them for six months. If you are among them, it is high time you start saving for less-than-likely scenarios that you may encounter in future.
It shall be a good move to invest some of your liquid cash in short-term investments such as high-yield savings accounts. This shall make your money work harder for you, earning a little more returns.
Diversify your holdings:
Almost all investment experts swear by the saying “don’t put all your eggs in the same basket”. The saying is extremely relevant in the current scenario when the threats of a global financial crisis are looming large.
It is prudent to divide your savings between different kinds of investment options such as stocks, mutual funds, bonds, REITs, and other avenues. You can also choose to invest in a balanced mix of large-cap and small-cap company stocks. You can also diversify your funds across assets from different countries. That way, only a fraction of your investments shall be affected if a certain sector of the financial market is badly affected.
Keep calm and carry on:
It is human nature to fret at the slightest possibility of an economic downfall. However, it is essential to maintain your composure during these troubled times. Panic makes us take rash decisions, and also adversely affects our productivity. Therefore, fear of recession might make you less efficient in your current job, thus reducing the value of your services to your employer.
Make a well-thought-out plan about your expenses and savings and stick to it. Save whatever you can, and try to enhance your market worth and employability. Refrain from taking impulsive career decisions. It is essential that you thoroughly analyze all your options when in financial trouble and judiciously take the best course of action. If you'd like to learn more how to plan your finances, book a free consultation with us.