10 financial rules to boost your chances of surviving economic downturn

Worried about what your financial situation will look like in a year — or even in a few months — from now? With all the concerns about economic growth, it’s reasonable to be worried about a potential recession.

But the key is to start preparing now so that you’re in the best position with your money, in the event that a recession does hit in the next six to 12 months.

To boost your chances of surviving an economic downturn, here are my top 10 recession money rules:

1- Build a 12- to 24-month emergency fund
 

In a stable economy, experts recommend saving for three to six months’ worth of living expenses.
 

But Catherine Valega, a CFP and wealth consultant, suggests that workers aim for 12 to 24 months in case they get laid off.
 

2- Minimize high-interest debt
 

See if you can negotiate your credit card interest rates by calling your card issuer. Think about how you can make a strong case — maybe you’ve been with them for a long time or have a good history of on-time payments.
 

If a rate reduction isn’t an option, consider transferring your debt to a lower interest rate card. Or you can consolidate your debts to lower your monthly payments and help free up capital that may be needed in the event of an emergency.
 

3- Prepare to borrow money
 

During a recession, many people need to borrow money to get through difficult times — and that’s okay.
 

But when interest rates are high, lenders will take a hard look at your credit score, making it more difficult, if not costlier, to get approved for loans.
 

So create a plan to boost your credit score. Making payments on time and keeping balances low are the most important factors when it comes to building credit.

4- Buy in bulk if you can afford to
 

Anything that is a cost savings today that you’ll need and use in the future will save you even more money later on, if inflation continues.
 

Non-perishable staples like toilet paper, toothpaste, shampoos and soaps, or even canned foods make great bulk purchases.
 

5- Build your emergency fund before you invest in the dip
 

Don’t start investing for the long-term until your emergency fund is set.
 

A loss of income can plunge you into debt, and high-interest debt can counteract investment returns.

6- Invest in recession-proof industries
 

Fear of buying the wrong stock can be mitigated by investing in established, well-known businesses.
 

Investors may want to consider sectors that generally do well in an economic slowdown, such as consumer staples, utilities and healthcare.
 

7- Create additional sources of income
 

One of the biggest risks consumers face during a recession is loss of income. Pad that risk by taking on an additional job.
 

You can find a second, hourly job with flexible hours (e.g., bartending or waiting tables, two occupations with a lot of job openings right now).
 

8- Resell your stuff
 

Second-hand sellers thrived during The Great Recession. Sell items you no longer use to second-hand stores.
 

To cut out the middleman, you can post items online on commerce marketplace like Poshmark, eBay or Kijiji.
 

9- Enhance your market value.
 

Improving your skills or enhancing your education will make you more marketable during a tight job market.
 

Sign up for classes, take workshops, volunteer — the soft and hard skills you pick up will add plenty of shine to your resume.
 

10- Don’t panic — recessions don’t last forever

If you lose your job or your income changes, you may have to cut back significantly or spend your emergency fund, but you can always recover that later.
 

Since 1900, the average recession has lasted about 15 months.
 

Source: CNBC website