The Great Recession of 2008 hit fast, and hit hard. Most people who were affected are still recovering. While the most difficult part of the economic downturn seem to be in the past, its effects are sure to linger for the rest of the current decade.
The 2008 recession also got many average households thinking about their finances. Before the financial crisis, high yield investments in areas like real estate were considered largely a safe bet. When the markets crashed, however, most people lost their investment funds, along with their life savings. Now, safe from the worst of it, it’s time to think soberly about how to protect one’s finances from another recession such as this. Yes, it’s possible to save money even in a recession. That why not everyone went bankrupt in 2008. So, here are some suggestions for safeguarding your money from another financial crisis:
Reduce Overall Debt
Almost everyone is affected by personal debt. Most of us incur debt from early on when we take out student loans hoping for a brighter future. Therefore, it’s common for adults in their late twenties or early thirties to be seriously in debt. However, the problems start if steps are not taken to reduce this debt. Too much debt can hurt a personal credit score, and in case of an economic downturn, could mean losing your home and savings. Therefore, keep your debt as low as possible, and make a resolution to not borrow more money unless your current debts are fully paid off.
Invest in Precious Metals
Investing should not be overlooked as a long-term strategy to increase wealth as well as to safeguard existing wealth in case of a future financial crisis. Now, conventional ways of investing, such as property or the stock market, could tank your finances if the market crashes, obviously. However, alternative investments in precious metals like gold or silver is an excellent way to ensure an income even when the market is in trouble. The value of precious metals like gold is inversely related to the value of the dollar. Meaning, when the dollar is up, the value of gold is not so hot. But when the dollar is down, as it happens during a recession, the value of gold goes up. This is why all savvy investors diversify their portfolios with precious metals.
Diversify Your Income
In addition to diversifying an investment portfolio, it’s also important to diversify the sources of income you have. Almost all adults devote their lives to a single full-time job at a time. However, if the economy takes a turn for the worse, the possibility of a layoff is very high. Many will remember that this is exactly what happened in 2008. Therefore, you must always prepare in advance for the inevitable. Do not rely entirely on one source of income. When you have free time on the weekends and evenings, do a part time job, or better yet, build a reputation for yourself as a freelancer. So, if you are suddenly laid off for some reason, you will be covered.
An economic recession is not the end of the world. Follow the above tips to safeguard your finances and ensure your peace of mind in case of another financial crisis.