How To Prepare For A Recession

The Data, Generally Speaking

Stocks have been on a tear since Mid-2009. That is 9 years of explosive growth and one of the longest contractions we’ve ever had. Real estate has been on a rebound since early 2012 as Bay Area homes show no signs of a slow down. But that seems to be changing as we’ve hit an inflection point. You can talk to a hundred experts and you’ll get a hundred answers. But one thing is for sure, the market has never been higher.

SP500-Over The Years

So the 64 Trillion dollar question is: are we headed higher on the graph or are we headed for a free fall? As of August 2018 more news is coming out about an impending crash. Investors are quickly putting on the brakes.

But regardless of what the market does, what I really want to know is, are you prepared for a crash? How resilient are you to a market meltdown?

Let’s dive in and look at all the housekeeping you have to get in order before the going gets tough:

Pad Up Your Emergency Fund

Let’s get one thing straight, your emergency fund is completely separate from your savings. The emergency fund is there to carry you over in case you lose a job. A comfortable padding should allow you to take care of all your mandatory expenses for 6 months without any type of income. Money is time so the more you have stashed away, the more time you bought yourself.

Create A Budget

So how much are you really wasting on lattes? Be meticulous in putting it together. Typical expenses include: rent, car payment, school payment, groceries, utilities, cell phone, credit cards (better pay this fully each month!), gas, cable, subscriptions, clothing, travel…and you get the idea. If it’s not written down on paper you most likely can’t see it. Trim the fat!

Are You Invested In The Markets

Do you have a financial plan? When I say ‘plan’, I’m really talking about a playbook. The younger you are, the riskier your portfolio. The older you are the more conservative your portfolio. So think fixed income (bonds, T-Bills, CDs) or high yield savings accounts. If you are highly invested in equities (stocks), you may want to think about reshuffling. Many experts say to not time the market, and let the money grow long term.

Clean Up Your Resume and LinkedIn

Polish up your resume and Linkedin and start reaching out to your contacts. Get a conversation going with your friends, colleagues and especially LinkedIn contacts. You don’t want to reach out to them out of the blue when the situation is dire. Build connections now.

Attend Events and Network

Start attending events, workshops, conferences and just get out there. Most of the good events are paid, and the mediocre ones are free. Definitely pay for the good ones, they are worth it and attract a higher caliber crowd usually. You can volunteer at events and attend them for free.  Meet people, and add them to your network/Linkedin. Beef up your network so that you can tap into it later. Be ready to offer the help too.

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