Today we are going to talk about the R-word, recession my friends!
Is a recession coming in 2020?
Probably! According to JPMorgan, it could rock us in July of 2020.
Our guest post is going to show us 5 things to avoid during a recession because, hey, you never know!
What are the 4 stages of the economic cycle?
We all are aware of the four periods in an economic cycle:
THE BOOM PERIOD: In the boom period the economy is working in its full capacity. The employment rate is high, the inflation rate is low, and the stock market is at its best.
THE RECESSION: It is also said to a contraction in the GDP. Sluggish wages decreased customers demand, and unemployment is the product of this cycle. This period generally stays for just one year.
THE DEPRESSION: The depression or slump is the reason for dropping all the economic activities. Major unemployment, low wages, and inflation are the product of depression. The depression may last for several years.
THE RECOVERY PERIOD: This period is just after the depression and just before the boom period in an economic cycle. In this period of time, everything becomes better, and the economy starts to pull through.
When asked to most of the people, almost all of them agreed to hate one period in particular, the recession period
The reason why people truly dislike the recession period is because going up the ladder(the economic cycle) is difficult, but you have the motivation that something good is at the end of the road. But when you are coming down the road of the economic cycle, you know you have to loosen up few things, and that is hard.
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In the recession period, so many changes, like, inflation, unemployment and much more occurs that you almost feel helpless and go down the lane with the rest of the people.
5 Things To Avoid During A Recession
Little do people know that with few precautions and some reservations we can do so much better than we think. So, here are some things people must avoid to be safe themselves during the recession.
BUYING THE UNNECESSARY
When we are earning as per our requirement, and the market is doing well, we do not care what we buy or what we don’t; although it is a bad habit even then, it does not make are not your necessity.
For this purpose, prepare a budget. I know preparing a budget may sound dull or hectic but trust me this little trouble can make your life a lot easy. Here is how you can prepare a budget.
- Know your cash inflow
- Know where you have to spend for your necessities
- Allowance for your monthly treats, so that you do not end up with some reckless spending.
- Have an emergency fund for the time to come. Because having a backup for your future is necessary.
- Weekly checkup.
- Stick to the plan.
If you are someone who just cannot do any good with the budget on a paper, then try an app like MINT for making your life a little easy.
SCALING UP YOUR LIFESTYLE
We love to earn to live better, and we all love to be more than what we are now, but you may also have heard that there is always a better time and place for everything.
I understand your need for a better life but know that not every time is accurate for scaling up, know when you can scale up your living standard, and it could not hurt you, or else you may end up in even a worse situation than you are now in.
If you have anything in your possession like a car or a house, then try and maintain it rather than going for a better version of it and if possible sell that thing and go for a cheaper version to save up some money for yourself.
Remember that the time will be good again and things will be fine and that is when you can have all you want, stay motivated. And keep in mind that this time is difficult and it has to pass with dignity. Think f everything you do because even an investment that may be short-term can harm in this period.
We all are the culprits here, we all have done that, and we all have been there. It all starts with a hectic day and a desire for one dinner outside or one takeout or delivery, and this becomes our habit, our lifestyle. Here are some drawbacks to our casual dining.
- Our health gets a lot affected
- Dining outside can charge you 50% more than cooking at home
- One of the main reason for this increased obesity is casual dining
Plan your meals ahead and cook at home. This way you will not just save up some cash, but you will also witness how well your health will be.
I know we all have days when we just need to lie down and relax, well for this purpose prepare meals ahead on the weekend and then you just have to microwave it a little to enjoy your meal.
SWITCHING TO CREDIT CARD
As a human, we have come to a long way, from cash to plastic money and from plastic money to digital money Bitcoin.
While plastic money has made our money safe and secure, it has also made us reckless buyers because come on who does not enjoy buying stuff and paying afterward whenever we want.
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If you are habitual of plastic money than go for debit cards instead of credit cards at least this way you will be restricted to paying when you have cash in your account because, in a sluggish market condition, nobody wants debt hanging around their neck.
You may be wondering that why drinking made up to this list but let me explain to you my stance. Drinking can be harmful in more than one way in the period of recession and here is how.
- If you are a regular drinker, you may think that you are spending almost nothing when you are buying some beer or wine but accumulate your cash outflow on your drinks and you will be astonished.
- Drinking on a regular basis or too much can be harmful to your health, and I know I am not the first person telling you so. In the recession, you have so much in your mind, money wise, that you may not want to pay for your hospital bill on the list too.
- We drink when we are happy or when we are depressed. In the recession, we have so much to stress about that how are we going to survive or whether the job I am will keep me with them or will I be fired in no time, that we start drinking. If drinking at night, you may end up going late to work and even if nobody was thinking to fire you, well now, they should because nobody likes a liability. And if you have come to a level when day drinking is a thing for you then May the Lord have mercy on both, you and your workplace.
Try to stay focused, give your best and leave the rest that is all that is necessary to be done!
Your turn: When it comes to things to avoid during a recession what are your tips and thoughts about it?
Author Bio: Sarah Smith has been a personal finance author for the last five years. She is also an independent and very passionate finance and investment advisor. She regularly posts at www.personalincome.org.