A recession is coming in 2023

Here are 7 ways you can prepare for it

May 31, 2023

A recession is coming in 2023.

New job openings are the lowest they’ve been since April 2021, and layoffs are the highest they’ve been since December 2020.

Preparation is essential.

Here are 7 strategies you can use to withstand the recession:

1. Beef up your savings

If you don’t have emergency savings, build them up as soon as possible.

Inflation is still running rampant, your job is at risk, and your investments took a hit in 2022.

If you lose your job, you’re going to need emergency cash to rely on.

Save 3-6 months of living expenses if you have:

  • No dependents

  • Relatively safe job

  • Dual income household

Save 6-12 months of living expenses if you have:

  • Dependents

  • Job is at risk

  • 1 income household

Basically, assess your risks (and your ability to cash flow emergencies) and save cash accordingly.

2. Reduce debt

If you have low-balance debt, pay it off immediately.

You’ll free up your minimum monthly payment and increase your cash flow.

With extra cash flow, you can:

  • Invest more money in stocks and real estate

  • Pay down other debts to further increase cash flow

  • Beef up emergency savings to supplement lost income

This will make it easier to weather a storm of financial uncertainty.

3. Diversify your income

You don’t need 7 different income streams.

But you do need at least 3.

Choose 2 of the following:

  • Main job

  • Side hustle

  • Spousal income

And 1 of the following:

  • Stocks

  • Real estate

It’s no longer enough to rely on 1 income.

Use this time to start building more.

4. Cut expenses

(Even if you already spend less than you make)

Why?

Because you must know how much it costs to survive.

Go through your expenses and see what’s necessary and unnecessary.

Then add them up to see how much they cost.

The necessary expenses will be your baseline if all hell breaks loose.

Notice how I said “will be your baseline” and not “is your baseline”.

That’s because you don’t need to spend less right now.

It’s just a plan in place if you need to.

5. Become irreplaceable

Become so valuable that it’s more costly for your employer to fire you. Make it so that they can’t afford to let you go.

Online education has made it possible to enhance the skills needed to increase your earning potential.

Here’s how to do it in 3 steps:

  • Assess your skills

  • Explore online learning platforms

  • Consume content

It’s never been easier to take advantage.

6. Don’t panic

The stock market is volatile during recessions.

This is unsettling for investors.

But the worst thing you can do during volatility is sell out of fear.

The average recession is 17 months.

Instead of trying to preserve your wealth by timing the market, use it to expand your long-term portfolio.

Selling is a temporary solution that prevents compound interest from working for you.

7. Invest in relationships

Networking is now the cornerstone of professional development.

  • Access to hidden opportunities

  • Referrals and recommendations

  • Mentorship and guidance

All these are benefits of cultivating strong professional relationships.

Your network isn’t just your “net worth.”

They’re also your career.

By implementing these strategies, you’ll better position yourself for financial stability (even in uncertain economic times).

Although recessions bring turbulence, they also bring opportunities for those who are prepared.

If you prepare now, you will be able to capitalize later.

P.S: Check out my most recent YouTube video on how AI is pumping the stock market.