2023 RECESSION? Don’t be nervous, be practical.
Lately, I have read many articles, with predictions of a looming, “mild, but short” recession. Some articles say it was going to occur in 2022, yet others say it's inevitable for 2023. What do you think?
Regardless of the current economic situation, be it, COVID-19, fires, floods, rising interest rates or inflation, recessions are an economic reality, and you should always be practical and prepared.
Mindset is everything. And whilst it's easier said than done, we simply cannot control the unknown, and therefore must focus on our own circumstances, and just be pragmatic.
“Control what you can control and minimise the risk of what you cannot” – Anthony Okocha.
Have an emergency fund & create a practical budget
Ideally, you should always have 3-6 months' worth of expenses/emergency funds set aside.
Create a detailed budget, be sure to include moderate fun, but be practical and ensure inflation is factored in.
I recommend the 50/30/20 rule, yet I’ve switched it around: 50% needs, 30% savings, debt repayment, investing & 20% wants.
Understand your needs v wants.
Needs – can’t do without. Wants – could do without, at least for a while. Understand nothing stays the same forever.
Pay down debt & avoid in-store deals & schemes
Start small if you must, BUT prioritise paying down high-interest debt, such as credit cards, After-Pay, buy now, pay later schemes, loan repayments, unpaid bills, fines, and any other debt you may have. Get into the habit of paying upfront for items that you need.
Live within your means.
Invest in yourself
Maximise your professional value, and improve your skills.
Invest in self-development, double down on everything, and use that to your advantage.
"Ultimately, there's one investment that supersedes all others: Invest in yourself” - Warren Buffet
Be creative with income and savings
Save, even if it's $50 per week
Reduce unnecessary costs, audit subscriptions, limit takeaway
Create a side hustle
Enter the Gig economy
If you have savings to invest, be savvy
Typically, the stock market drops before a recession begins, and this time can be the best time to invest. Do your research.
Perhaps Buffett’s most famous quote is, “be greedy when others are fearful and be fearful when others are greedy”. It’s another way of saying ‘buy low, sell high’, which is the timeless advice everyone knows when it comes to the share market.
Run a business? Communication is key.
Communicate proactively with your clients. Listen to their needs. Often, they too will be having similar concerns and feel the same pressures. Support them. Don’t see them as another business transaction, without them, you wouldn’t have a business.
Prepare for opportunities
Business won't be down for everyone, and some businesses may thrive in adverse situations. Know your industry, leverage technology and improve efficiency & resources as much as possible.
“In this time of recession, it is the time for invention. Did you know both the telephone and the automobile were invented during recessions? So was ‘talking dirty.'” Eugene Mirman
We hope this helps you feel a little less nervous about recessions, and inspired to get practical!