How to prepare for recession in 2023

You’re hearing about recession coming and you’re wondering how to get ready for it?

Thankfully there are some positive steps you can take to minimize the impact on you and your family.

Don’t panic

This seems counterintuitive but the research is in. Making financial decisions under stress will almost always result in a worse decision being made. Regardless of your financial situation the best thing you can do is to stay calm and rational. Acknowledge your emotions but don’t act on them. Studies show over and over again that people who stay calm and ride over the turbulence of economies are more likely to come up on the other side in a better situation. You don’t want to sell low them be forced to buy high.

Nathan Cowley

Get out of variable interest rate loans

If you have any loans that are tied to variable interest rates, then now is the time to exit them. Interest rates are increasing and depending on inflation may increase even more. Credit cards or mortgage products with variable interest rates are going to be the first thing you want to exit. Loan consolidation products can help.

Pay down your credit card debt

Speaking of credit card debt. If you can pay it down to zero then do so. Depending on how much cash you have you will want to opt to not carry any recurring credit card debt as the payments will be an unwarranted expense.

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Do not make any large unnecessary purchases

This is a time to hold back on your spending. Especially on large unnecessary goods. Like TV’s, furniture, appliances and so on. And if you do need something like a replacement washing machine then consider looking for used ones on sites like Offer Up or craigslist.

The other category of expenses to trim back on are vacations. They can be quite expensive when you include airfare, hotels, food and other transportation. Consider staycations or local vacations that are drivable and more affordable. We often don’t visit the areas we live in as vacation destinations but there’s always something interesting to discover nearby if you look.

Also if you spend on a lot on clothes, this is a good time to check out thrift stores which will see an increase in donations as people thin their inventory.

Make sure you have a financial buffer that can last at least one year

Put away money. Save save save. If there are things that you can do to make more money, then do it. Have extra clothes that you wont be wear again? Sell them. Have things in your garage that you don’t want? Sell them. Have skills you can offer that others could buy? Sell them. Consider looking online for gig work that you can use to supplement your income. You are an expert in something and you should get paid for it.

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Remember - most important thing is DO NOT PANIC. You’ll be just fine.

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